PTSB’s move to put itself up for sale has stoked concerns a new owner will cut branches and jobs in the Republic’s least cost-efficient bank.
The 57 per cent State-owned bank surprised the stock market on Thursday morning by announcing it had put itself up for sale – sending its market value up 23.4 per cent in Dublin to €1.58 billion.
A deal would mark the return of all three domestic banks that survived the 2008 financial crisis to private ownership – and complete the recovery of the €29.4 billion in total that was injected into them.
PTSB, by far the smallest of the three, has been dogged by low profit returns since the crash. This is largely due to its small scale – even after increasing its balance sheet by about 50 per cent between 2022 and 2023 after acquiring €6.8 billion of Ulster Bank loans.
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“A key attraction for any prospective buyer – be it another bank or private equity – is likely to be material further cost extraction,” said John Cronin, founder of SeaPoint Insights, an independent Irish research and analysis firm specialising in banking and financial services. “Headcount reduction and branch footprint shrinkage are two key things that will likely be used by any new owner.”
Benjamin Toms, an analyst with RBC Capital in London, said a private equity firm “is probably the most likely acquirer who might see an opportunity from tackling the bank’s large cost base”.
A spokesman for the Financial Services Union (FSU) called for clarity on job security and the future of the branch network – and for the Minister for Finance to rule out selling to a private equity firm. “We are liaising with bank management and requesting an urgent meeting with the Minister for Finance to ensure protections for staff, and business are in place before any sale is agreed,” he said in response to questions from The Irish Times.
PTSB chief executive Eamonn Crowley refused on a call with reporters to rule out any type of buyer. “It’s an open process,” he said.
While PTSB is on track to cut 300 jobs this year – equivalent to almost 9 per cent of its 3,360-strong workforce at the end of 2024 – it will continue to have the highest cost base, relative to total income, among Irish banks. It has 98 branches, including 25 bought from Ulster Bank.
The bank’s forecast €525 million running costs for this year will still equate to more than 75 per cent of total income – compared to figures below 50 per cent at AIB and Bank of Ireland. PTSB has set itself an objective of reducing its cost-income ratio to 62 per cent in 2027, as the other two banks continue to see theirs remaining below 50 per cent. This is the benchmark that most European retail banks aim for.
PTSB received a €4 billion State bailout in 2011 and has so far repaid €2.8 billion. The total includes cash received from the sale of its former sister company Irish Life, share sales, redemption of bailout bonds, guarantee fees and interest payments.
The State’s remaining stake was worth €900 million at the end of trading on Thursday – leaving taxpayers about €300 million under water, on paper, on their original investment.
However, the State is on track to more than break even on the three remaining banks as a whole, on a cash-in, cash-out basis.
It recovered €2 billion more than the €4.8 billion pumped into Bank of Ireland by the time it sold its remaining shares in that bank in late 2022.
However, the sale of a final stake in AIB in June left the Government on track to fall about €700 million short of recovering the bank’s full €20.8 billion rescue bill. That is even after accounting for stock warrants it continues to hold in AIB, which the bank is soon expected to buy back for about €300 million.
“The State’s investment in PTSB was made during the financial crisis to safeguard the stability of the banking system and protect depositors,” said Minister for Finance Paschal Donohoe. “A sale of the State’s investment would be consistent with the objective of recovering taxpayer funds that were used to rescue the Irish banks and deploying these to more productive purposes.”
Austrian bank Bawag, which owns Irish mortgage lender Moco, and Spain’s Bankinter, which owns Avant Money, may be among banking groups to at least run the rule over PTSB, industry sources say. Bankinter played down the prospect of taking on PTSB on a call with analysts last week.
