Permanent TSB to sell off non-core operations

Bank reduced losses to €261 million last year but loan impairments rose to €927 million

Glen Lucking (left) group chief financial officer and Jeremy Masding group chief executive of Permanent TSB. It is to sell its non-core commercial real estate book in Ireland.

Glen Lucking (left) group chief financial officer and Jeremy Masding group chief executive of Permanent TSB. It is to sell its non-core commercial real estate book in Ireland.

Thu, Mar 27, 2014, 01:01

Ciarán Hancock, Finance Correspondent

State-owned Permanent TSB has decided to sell its non-core commercial real estate book in Ireland and its Springboard Mortgages business, which is no longer writing home loans. It is understood that this is likely to take place later this year or early in 2015.

The CRE book has a gross value of €2.1 billion. Just 31 per cent of this book is performing with the bank taking provisions of €900 million on the loans. Management of this book was outsourced to Certus by PTSB last year.

Springboard has a loan book of €465 million, comprising 2,200 mortgages. The business is no longer offering loans and is effectively in wind down.

PTSB had originally been expected to sell its UK Capital Home Loans and Isle of Man businesses, which are also considered to be non core. But the bank has decided that the “increasing [RECENT]buyer appetite” for Irish property assets makes this a good time to look at selling the CRE assets and Springboard.

“We will concentrate on selling the Irish assets first,” PTSB’s chief executive Jeremy Masding said yesterday.

He added that the assets would be put on the block “within a reasonable timeframe” and he expects to get “strong prices” for theM. Mr Masding said the sales would be a signal that the business is “getting further in shape”.

No external advisers have yet been appointed to handle the sales.

PTSB yesterday reported reduced after-tax losses of €261 million for 2013. This compared with a deficit of €996 million in the previous year. The result was flattered by a €329 million gain from the winding up of its defined benefit pension scheme, and a €407 million credit from deferred tax assets.

Its operating loss before exceptional items was unchanged at €977 million.

The bank’s impairment charge on loans to customers rose last year to €927 million from €883 million in 2012. This reflected the outcome of the Central Bank of Ireland’s balance sheet assessments in the second half of last year.

The impairment on the Republic of Ireland residential mortgage book rose to €727 million from €508 million in 2012.

The charge on its Irish commercial mortgages halved to €160 million and fell by €4 million on the UK residential mortgage book to €25 million. The impairment relating to consumer finance declined to €19 from €30 million.

This brought the bank’s impairment provisions to just more than €4 billion, or 12 per cent of total net loans to customers.

On a more positive note, its operating income rose by 27 per cent to €252 million. The bank’s net interest income also rose marginally last year to 0.82 per cent from 0.72 per cent previously. However, Mr Masding accepted that this is still some way short of the level the bank requires.

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