PTSB restructuring decision delayed

The European Commission will not decide on Permanent TSB’s restructuring plan until the end of the year as it is still awaiting updated financial information from the Government.

The Government submitted a restructuring plan for PTSB in Jun 2012, which would see the third pillar bank split into a good bank and an asset management unit that would run down its troubled loanbook. Its UK assets would be hived off into another division, which will be put up for sale.

A spokesperson for the European Commission in Brussels said it was waiting for updated information from the Government before it could make a decision on whether the restructuring plan could proceed.

A Department of Finance spokesperson said because of the changes in market circumstances since last June, which include the ending of the Government’s eligible liabilities guarantee scheme and a change to base interest rates, the directorate general for competition had requested updated financial forecasts.

“These forecasts will be submitted shortly. The request for updated financials is not unusual and the structure of the plan is broadly the same as that proposed in Jun 2012.”

In its last review of the Irish economy, the troika noted the major challenges facing the banking sector. It said PTSB’s prospects of returning to profitability hinged on the Commission giving the go-ahead to its restructuring plans.

PTSB made a pre-tax loss of €922m for 2012 following an impairment charge of €891m for the year. Roughly 16% of its entire residential mortgage book is in arrears and a total of €15bn of its mortgage book is in the form of mostly loss-making trackers.

In 2012 it paid €165m in ELG fees. PTSB chief executive, Jeremy Masding, says the core good bank could return to profitability by 2016.

Like the other domestic banks, PTSB must meet a series of strict Central Bank imposed deadlines on agreeing potential solutions with mortgage arrears customers by the end of this year and putting in place workable solutions with these customers over 2014.

It will have to undergo an asset quality review at the end of this year and a stress test conducted by the European Banking Authority in March next year.


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