THE BOARD of Irish Life & Permanent Group Holdings considered closing its banking subsidiary during talks on the restructuring of the group with the troika, chairman Alan Cook told shareholders at its annual meeting in Dublin yesterday.
“Nothing including outright closure of the bank was excluded ,” Mr Cook said.
IL&P will submit its restructuring plan to the European Commission for approval before the end of June, he added.
This will involve the separation of Irish Life from its banking arm Permanent TSB, which made a loss before certain exceptional items of €65 million in 2011.
He said the intention was to create a “new smaller and more competitive [Irish] retail bank” to operate in conjunction with an asset management arm and CHL, its closed book mortgage business in the UK.
“Ultimately, we aspire to creating a competitive and profitable retail bank in Ireland,” he said during a stormy meeting that lasted for more than 2½ hours.
Shareholders vented their anger at PTSB’s high standard variable interest rate for residential mortgages and the fact that they have been wiped out by the €4 billion recapitalisation of the group by the State, which was required following reviews of its capital requirements by the Central Bank.
This involved a €2.7 billion injection of capital by the Government and the forced sale to the State of Irish Life for €1.3 billion.
This has resulted in the State taking a 99.2 per cent stake in the business with shareholders now owning just 0.8 per cent.
Mr Cook said this was a “matter of huge regret” to the board.
Mr Cook said its recent 0.5 per cent reduction in its variable mortgage interest rate was a “gesture” not “scientifically calculated”.
“It’s an indication of our intent . . . to put the business back on an even keel,” he added.
Brendan Burgess, founder of personal finance website askaboutmoney.com, was given the opportunity to address the meeting.
Mr Burgess said ILP had done “enormous damage” to many families around the country by pushing up its mortgage rates.
“The predatory rates are counter productive,” he said. “You are losing money by forcing people into arrears.”
He said IL&P was now considered a “toxic bank” and a “predatory bank”.
Mr Burgess also criticised IL&P’s public interest directors, Ray MacSharry and Margaret Hayes, for their roles in the company’s affairs over recent years.
He called for the bank to reduce its standard variable rate from the current 4.69 per cent paid by existing mortgage holders to 3.69 per cent, which is offered to new customers.
In replying to this issue about a two-tier interest rate structure, Mr Cook said: “We are issuing virtually no new mortgages even at that rate. I can’t stand here in front of you today and state that this is the right rate [4.69 per cent].”
Mr Cook said the board needed to “work hard” at “fixing” the bank and making its products more competitive.
All 11 resolutions were passed, having received the support of the State.
This included a proposal to change the company’s name to Permanent TSB Group Holdings.
Speaking to the media after the meeting, Mr Cook restated PTSB’s ambition to become the third biggest retail bank in Ireland but declined to say how many job cuts would be required as part of its restructuring.
“I will be upfront with people as soon as I know the answer,” commented PTSB chief executive Jeremy Masding.
