The European Commission has approved an updated restructuring plan for State-controlled Permanent TSB that is aimed at ensuring the long-term viability of the bank.
The Commission said on Thursday that the restructuring aid granted by the Government to the bank is in line with EU State aid rules.
PTSB received €2.7 billion of capital during the financial crisis.
The European commission has previously approved restructuring plans for both Bank of Ireland and AIB.
The Commission concluded that the final version of PTSB’s plan set out a credible strategy to make the lender profitable. Under the plan, PTSB will operate as a smaller domestically-focussed bank with an improved funding profile.
The plan sees PTSB seeking to increase its level of profitability by disposing of low-yielding assets and increasing net interest margins. The bank is also in the process of raising €525 million from private investors to plug a hole identified in recent stress tests undertaken by the European Central Bank last October.
PTSB submitted its revised capital-raising plan to the ECB in November. Commissioner Margreathe Vestager, who is in charge of competition policy, officially sanctioned the plan on Thursday.
“The restructuring plan sets out a clear path for the bank’s long-term viability without further state support. It also confirms the effectiveness of EU state aid rules, which allowed the Commission and Irish authorities to work together successfully to strengthen confidence in the Irish banking sector in order to return it to normality,” she said.
The Commission said that the commitments made by PTSB will ensure that the competition distortions brought about by the aid are limited. It said that given this, the measure are in line with the Commission’s Communications on state aid for banks during the crisis.
“This decision gives the final approval to aid measures granted to PTSB, including the recapitalisation measures which had previously been approved on a temporary basis pending the submission of a restructuring plan,” it said.
