Permanent TSB to cut 250 jobs

State-controlled Permanent TSB has today confirmed plans to cut 250 jobs and to close 16 branches in the near future.

The group also announced plans to reduce operating costs by 10 per cent and reorganise its operations through three business units: Permanent TSB, an asset management unit and its UK mortgage loan business, CHL.

The bank is essentially being restructured with a good bank being carved out and €12.5 billion of loans moving into an asset management unit to be sold or run down.

The Government took control of Permanent TSB last year following a €2.7 billion bailout. A further €1.3 billion was injected into the bank last month, completing its recapitalisation, after the State bought Irish Life.

Permanent TSB, which currently operates 92 branches across Ireland, said that in addition to the closure of 16 branches, a further two branches will become self-service locations.

It said that it also intends to close one of its Dublin city centre branches, but will "significantly invest" in a nearby branch to create a flagship site in the capital.

The bank said it intended to implement its restructuring programme "as a matter of urgency."

It intends to launch a voluntary severance scheme based on three weeks’ pay per year of service plus statutory entitlements, it said.

Chief executive Jeremy Masding, who hinted at the changes during his appearance before the Oireachtas Finance Committee last week, said that the overriding objective of the plan was to secure a viable future for a core banking business while minimising losses from the organisation's challenged loan book.

“Our objective is to carve out a viable, efficient, competitive and customer focused Permanent TSB bank from within the current group. We believe that such a bank can make a positive contribution to the Irish banking landscape and is the best way of protecting the taxpayer’s investment in our business," he said.

"We face significant challenges; however we are very confident about our future prospects once this restructuring plan has been implemented.”

Permanent TSB's long-term credit rating was last week downgraded to B+ from BB- with a negative outlook by Standard & Poors.

S&P said the lender, which is 99.2 per cent State owned, faces numerous challenges in selling assets and returning to profitability.