Permanent TSB pledges to complete Ulster Bank mortgage deal this year as it posts €36m loss
Permanent TSB chief executive Eamonn Crowley said the bank was attracting “tens of thousands” of new deposit and current account customers, as Ulster and KBC prepare to close their doors.
Permanent TSB said it aims to complete the acquisition of mortgage loans from Ulster Bank by the end of the year and to secure 25 branches as part of that deal in early 2023, but has also made plans for the overall transaction to be done “no later” than next summer.
The lender also posted pre-tax losses of €36m for the six months to the end of June that are linked to the costs it has taken on to absorb the mortgage loans and branches from Ulster Bank. It is recruiting heavily to complete the Ulster Bank deal, the bank said.
The competition watchdog last week approved the €7.6bn plan by Permanent TSB to acquire a huge chunk of the non-tracker mortgage loan book from Ulster, part of a trio of banking deals involving the closures of Ulster Bank and KBC Ireland that will change the landscape of Irish banking forever.
Permanent TSB was also given the green light to secure 25 branches from Ulster Bank, including the Wilton branch in Cork, Shannon in Co Clare, and Thurles in Co Tipperary.
In its earnings statement, Permanent TSB chief executive Eamonn Crowley said the bank was attracting “tens of thousands” of new deposit and current account customers, as Ulster and KBC prepare to close their doors.
Mr Crowley also said it had increased lending for home mortgages and to small firms, with its mortgage market share unchanged at around 16% at the half-way stage.
However, its share of new mortgages in the first half of the year, at 16.3%, compares with a share of 17.5% a year earlier, the bank said.
The lender also said it was in good shape to continue to increase new lending through the rest of the year, despite the threat of the cost-of-living crisis.
Irish house prices will continue to rise this year “but at a slower rate than the prior year” amid continuing strong demand for housing, according to the bank's forecasts.
It reiterated it will boost its profitability and secure “exceptional accounting gains” as it prepares for the deal with Ulster Bank to be completed this year.
“The Irish economy and operating environment for banks has remained positive in the first half of the year, notwithstanding the near-term headwinds which are beginning to manifest in the form of high levels of inflation driven primarily by rising energy and fuel costs,” the bank said.
The decision last week by the Competition and Consumer Protection Commission, or CCPC, completes most of the regulatory hurdles for the dominant players Permanent TSB, AIB, and Bank of Ireland to carve out the loan books from their major rivals, Ulster Bank and KBC Bank.
Those two major rivals are closing their doors in the Republic, although NatWest-owned Ulster Bank will continue to operate in the North.
Following in-depth probes, the CCPC had already approved, in May, the plan by Bank of Ireland to secure €9bn mortgage loans from KBC, and in April, the plan of AIB to acquire €3.7bn in commercial loans from Ulster Bank.
There will likely be a fourth deal that will require a watchdog investigation in the coming weeks after AIB doubled down to also propose to acquire €6bn in tracker loans from Ulster Bank.
The deals mark the biggest shake-up in Irish banking for household and business customers since the hugely expensive banking bailouts were forced on the State to save the banking system from collapse over a decade ago.
Many economists and mortgage brokers with years of experience of banking here have said that the scramble for the Ulster and KBC loan books is bad news for competition and bad news for Irish households and small businesses, who already pay among the highest rates for the most expensive loans in Europe.
Running through the Permanent TSB ruling last Friday and the two earlier decisions is the acknowledgment that the watchdog had little choice but to approve the deals, even as it said that competition would be harmed, experts have said.
Regarding Permanent TSB, the CCPC last week said it had no influence over plans by any bank to pull out of the market in the Republic, noting it had "previously highlighted its concerns in relation to competition in the banking sector".
