Permanent TSB (PTSB) chief executive Eamonn Crowley told members of the Oireachtas finance committee on Wednesday that the lender's talks to acquire parts of Ulster Bank's business remain "constructive", but added that he was restricted from giving details about the negotiations.
“If we are successful in agreeing commercial terms, Permanent TSB will be a bank with more customers, a larger footprint, greater reach and a greater ability to bring new and better products and services to retail and SME customers,” Mr Crowley said.
“I have been greatly encouraged at how constructively both sides are approaching these discussions. It is my aim that we will reach an agreement that will benefit customers and create value for the State through its shareholding in the bank.”
The 75 per cent State-owned lender confirmed in late February that it was in talks to acquire Ulster Bank loans and deposits, after the latter's parent, NatWest, said it will wind down its unit in the Republic in the coming years.
However, the talks have not reached a stage where both sides have agreed a memorandum of understanding (MoU) to advance a deal.
Loans
PTSB would most likely be interested in €9 billion of Ulster Bank’s €20 billion loan book, including non-tracker mortgages and small-business and consumer loans, according to analysts. That’s the equivalent of 60 per cent of the size of PTSB’s own loan book.
Analysts estimate PTSB will need to raise €550 million of additional capital to support such an acquisition, which is greater than the bank’s current €520 million market value. It is expected that the money will come from both stock market investors and the Government.
PTSB is also in talks to take on Ulster Bank deposits and some of its 88-strong branch network.
Mr Crowley highlighted that PTSB extended temporary payment breaks on 13,000 loans last year at the height of the financial crisis and that it continues to “work closely” with about 1,000 customers who have not yet been able to return to full repayments. Still, he said that the level of financial distress among customers was lower than had been feared at one stage last year.
