Permanent TSB confirms involvement in Ulster Bank loan book carve-up talks

State-owned bank interested in acquiring branches as well as mortgages and small business loans 
Permanent TSB confirms involvement in Ulster Bank loan book carve-up talks

Eamonn Crowley, CEO of Permanent TSB.

The chief executive of Permanent TSB has confirmed the Government-owned mortgage bank wants to be involved in the carve-up of the €20bn of the loan books owned by Ulster Bank.

Eamonn Crowley said he is "quite positive at this moment" about the progress of the talks.

He said the bank is seeking to buy mortgages as well as small business loans from Ulster Bank's parent NatWest adding that buying parts of Ulster Bank would undoubtedly strengthen Permanent TSB.

Mr Crowley said Permanent TSB is also interested in acquiring the branches of Ulster Bank as it prepares to exit the market in the Republic but the bank also said that negotiations are still at an early stage.

Covid fallout

It comes as Permanent TSB showed the fallout of the Covid-19 economic storm.

It posted an underlying loss of €109m for 2020 compared with a profit of €74m in 2019 and disclosed an after-tax loss of €162m which compares with a net profit of €30m in the previous year. 

The bank said it had returned to profit in the second half of 2020.

The bank has a loan book of around €15.8bn in home loans but has, for some time, wanted to expand into lending to small firms, or SMEs. It said it kept all of its 76 branches open during the pandemic.

On the Ulster Bank loans, Mr Crowley said it is in talks about acquiring "certain retail and SME assets, liabilities and operations".

"Until an acquisition is finally concluded there can be no certainty that an acquisition will occur or on what terms," Mr Crowley said.

Market dominance

The Government has marshalled Permanent TSB as well as fellow State-owned AIB in recent weeks to buy large parts of the Ulster Bank loans after NatWest said that it will exit the banking market, a move that banking experts have warned will further strengthen the dominance of the big two — AIB and Bank of Ireland.

The Government owns 75% of Permanent TSB and some banking experts said that the State may likely support the bank in helping it acquire parts of Ulster Bank, possibly along with outside investors, by injecting more money into the lender.

Like all Irish banks, Permanent TSB was hit hard by the pandemic but it is among the weakest in terms of financial health.

Its net interest margin — a key measure of the profitability for lenders — fell to only 1.73% in 2020.

"Despite the challenges that 2020 brought, I am confident that the bank is in a strong position to make the most of the opportunities that will arise in the post-pandemic recovery phase," Mr Crowley said.

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