Austrian banking group Bawag is close to carrying out a deal to free up capital on its balance sheet, at a time when it is in the race to buy PTSB.
The lender is currently working with Italy’s Unicredit to shift part of the risk – and capital requirements – on a portion of about €2 billion of credit card receivables, Bloomberg reported on Tuesday.
So-called significant risk transfer (SRT) deals see groups of institutional investors take on part of the risk of losses on the loans in portfolios for an extended period of time, reducing the level of capital the bank needs to hold in reserve against the loans. The investors receive an annual interest payment for taking on the risk.
Bawag has been one of the most active users of SRTs relative to the size of its balance sheet, according to analysts. Irish banks Bank of Ireland and AIB have also engaged in such deals in recent years to improve their capital efficiency.
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The Vienna-based group is also reported by Bloomberg to be planning another SRT.
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The banks current efforts to ease its capital requirements come as it vies against Texan funds giant Lone Star and a consortium involving New York-based Centerbridge and San Francisco investment firm Sixth Street to acquire PTSB.
PTSB, which is 57 per cent Government owned, put itself on the market last October and the process is understood to be nearing a conclusion. Austrian reports last months put it that Bawag was planning to bid €1.6 billion for PTSB, which would be about 20 per cent of its tangible equity value.
Bawag bought Irish mortgages start-up Moco in 2023 and was involved more recently in exclusive talks to buy Finance Ireland, a non-bank provider of car, commercial property, agri- and small-business loans, for as much as €300 million.
However, The Irish Times reported last month that the talks with Finance Ireland ended without a deal.
Bawag also bought what remained of Dublin-based Depfa Bank from a German state bad bank in 2021 as that lender was in the process of being wound down.
