Executives from Austrian banking group Bawag have indicated they may move PTSB into corporate and public-sector lending to expand the Irish bank’s business beyond its current focus on mortgages and small-business lending.
Speaking as Bawag reported quarterly results on Tuesday, group chief executive Anas Abuzaakouk said that there are potentially “interesting opportunities” for PTSB, particularly in commercial real estate and public-sector lending, and potentially corporate lending.
“We’re going to be able to bring a full suite of retail and SME and corporate banking products and we’re pretty excited about the opportunity,” Abuzaakouk said on a call with analysts.
Comments about the prospects of also moving PTSB into public-sector and corporate lending will underpin hopes in Government – which agreed last week to sell its 57.5 per cent stake to Bawag – that the smallest of the remaining three Irish banks will become a real challenger to its larger peers. It comes as the Government has been criticised by a number of analysts for agreeing to a €1.62 billion takeover, which values PTSB at an 18 per cent discount to its net assets.
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Bawag said in a transaction agreement document, published last week, that it plans to carry out a “detailed review” of product lines it has on offer in Austria, Germany and the Netherlands, with a view to rolling them out in Ireland. This will include household energy-efficiency loans, small-business and self-employed banking products, investment brokerage services, and financing of residential and commercial real estate development and investment, according to the document.
Abuzaakouk’s comments on Tuesday point to further scope for PTSB, where mortgages accounted for almost 93 per cent of a €22.3 billion gross loan book at the end of 2025.
Bawag said the PTSB deal will require about €1 billion of self-generated funding, which should come from excess capital on its balance sheet, profits accumulated during the first half of this year and money being freed up from essentially insuring parts of its loan book. It plans to hold off on share buy-backs and limit its full-year dividend to about €500 million, which would be accumulated in the second half of 2026. The group is planning to pay €481 million in dividends on last year’s earnings.
The bank has a backup option of also raising fresh capital and further altering its dividend plans, it said. However, Abuzaakouk said: “This is clearly not our preferred option.”
It is expected that the remaining €620 million would be met by using excess PTSB capital, which amounted to €200 million in December, generating a large accounting gain – known as badwill or negative goodwill – from buying PTSB at a discount to its net assets, and potentially also insuring part of the Irish bank’s loans against losses.
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The last element would be done through a so-called significant risk transfer (SRT) deal that would see groups of institutional investors take on part of the risk of losses on the loans in portfolios for an extended period, reducing the level of capital the bank needs to hold in reserve against the loans.
While the PTSB deal is valued at an almost €400 million discounted to the bank’s stated net assets at the end of 2025, this will be subject to change as the fair value of its assets are remeasured as part of the takeover. Bawag executives have said that any such gain would likely be reinvested in the Irish business. A replacement of PTSB technology with group systems would trigger a large, non-cash intangible assets writedown.
The Bawag executives were also asked on the call if they would consider moving some activities elsewhere in the group – which also has operations in euro zone countries Germany and the Netherlands as well as Switzerland, the UK and the US – to the Dublin business to avail of lower taxes. Austria has a 23 per cent corporate tax rate, while Ireland now has a 15 per cent rate for large companies under an international minimum-tax agreement.
“Obviously, we’re thinking about the overall group structure, but it’s really premature to share any details of that,” said Bawag chief financial officer Enver Sirucic. He said the group-wide tax rate is on track to move from about 26 per cent currently to the “low 20s” when the PTSB deal concludes.
“If things change from a structural perspective, that number could be different,” he said.
