Plan to create third sustainable bank
Finance Minister Micheal Noonan said a plan to re-structure Permanent TSB, the banking arm of Irish Life and Permanent, would create a third, sustainable Irish bank. He said the bank had a large branch network and 1,800 employees in Ireland, so he could not see any reason why a sustainable retail bank could not emerge.
“Agreement has been reached, in line with the programme commitments, on the strategic direction for Permanent TSB, with a formal restructuring plan to be submitted to the European Commission by the end of June. The objective of this plan is to create a viable retail bank focused on lending into the Irish economy. This will be achieved by carving out a viable bank from the current Permanent TSB business,” he said.
The bank will be chopped into three separate sections: An asset management unit, a UK business, and Permanent TSB.
The asset management unit will perform as the bad bank element of the plan, taking non-performing loans out of Permanent TSB.
The secretary of the Department of Finance, John Moran, indicated that it would not just be the bank’s tracker mortgages that would be placed in the asset management unit.
Permanent TSB said the bad bank element would contain “a wide range of assets and loans” valued at €12.5bn.
The plan to return Permanent TSB to a profitable banking institution will be based on the €14.2bn of legacy loans that it will continue to manage.
The British element of the bank, with a loan book valued at €7.1bn, will be run as a separate bank.
Mr Noonan said that a plan had yet to be developed for this part of the business but it could be run down over time.
In a joint statement the chairman and chief executive of Permanent TSB bank, Alan Cook and Jeremy Masding, said there was potential to develop a profitable bank and get a return for the Irish taxpayer in the plan.
