Permanent TSB completes €8.4bn deleveraging plan

Bank offloads remaining UK mortgage book to US firm Cerberus Capital Management

PTSB chief executive Jeremy Masding described the transaction as a “milestone” because it completes the final element of the restructuring plan agreed with the European Commission as part of its State aid. Photograph: Alan Betson / The Irish Times

PTSB chief executive Jeremy Masding described the transaction as a “milestone” because it completes the final element of the restructuring plan agreed with the European Commission as part of its State aid. Photograph: Alan Betson / The Irish Times

 

Permanent TSB has completed the last stage of its €8.4 billion deleveraging plan with the sale of the balance of its UK mortgage book to US-based Cerberus Capital Management.

The deal will involve a 15 per cent haircut on the £2.29 billion face value of the Capital Home Loans portfolio, which comprises mostly buy-to-let loans.

PTSB chief executive Jeremy Masding described the transaction as a “milestone” deal, as it completes the final element of the restructuring plan agreed with the European Commission as part of its State aid.

PTSB, which is 75 per cent State owned, is selling £2.29 billion of face value loans to an affiliate of Cerberus, having already sold it the other half of the CHL loan portfolio.

The gross proceeds will be about £1.95 billion in cash and will be used to reduce PTSB’s group borrowings.

Brexit delay

PTSB had been due to dispose of this buy-to-let loan book by the end of June but was forced to delay the sale because of the impact of Brexit. The bank was advised on the deal by Morgan Stanley.

Mr Masding said: “This transaction is a milestone event for the group. Its completion in the coming weeks will conclude the very ambitious deleveraging programme of some €8.4 billion which was set out for the group under the restructuring plan agreed with the European authorities.

“Perhaps most importantly, it will complete our pivot to the Irish retail marketplace and allow us to focus exclusively on growing our commercial position in key segments of the market here. That is now our overriding priority, as Ireland’s only pure domestic retail and SME bank.”