PTSB considers raising €500m from investors

Some of funds could be used to repay State’s €400m in CoCo notes

Permanent TSB’s capital-raising plan has yet to be finalised by the board and presented to the Minister for Finance for approval. Photograph: Alan Betson / The Irish Times

Permanent TSB’s capital-raising plan has yet to be finalised by the board and presented to the Minister for Finance for approval. Photograph: Alan Betson / The Irish Times

 

Ciarán Hancock, Finance Correspondent

Permanent TSB is considering raising about €500 million from external investors with a view to then repaying the State’s €400 million in convertible contingent capital notes, or CoCos as they are better known.

The Irish Times has learned that buoyed by strong interest from international investors during recent roadshows, Permanent TSB is now looking at raising about €500 million, having previously been expected to raise between €300 million and €400 million.

This could involve a stake of between 30 and 40 per cent being sold to the external investors.

The CoCos carry an annual coupon of 10 per cent and can be converted into ordinary shares on their maturity on July 28th 2016. It is understood that private investors would be keen for these to be dealt with at the same time as their capital investment in the bank.

PTSB is being advised by Deutsche Bank on its capital raising plan while the department of finance has engaged JP Morgan.

Financing the CoCos would represent the first repayment by PTSB of its net €2.7 billion bailout by the State in 2011.

At the time of its original €4 billion rescue, PTSB was part of the listed Irish Life & Permanent group. The State split the group in two, selling Irish Life to Canada’s Great-West Lifeco for €1.3 billion in 2013.

PTSB is 99.2 per cent owned by the State, with the residual shares trading on the junior ESM market on the Irish Stock Exchange. The shares are currently trading at around 6 cent each and the company has a market capitalisation of €2.2 billion.

The bank’s capital raising plan has yet to be finalised by the board and presented to the Minister for Finance Michael Noonan for approval. This is expected to happen by the end of March.

PTSB will issue its full-year results and annual report on March 11th and it would be expected to make some comments on its capital raising plan, which stem from the fact that it failed the European Central Bank’s adverse scenario in pan-European stress tests last October.

The ECB identified a capital shortfall of €855 million at PTSB for the year ended December 2013 but this has reduced to €125 million as a result of various actions by the bank in the meantime.

The bank is also believed to be close to receiving approval from the European Commission for its restructuring plan under State aid rules, which would be an important step before any private investment. The Commission has already approved plans for both Bank of Ireland and AIB.

It is understood that any funds received from the repayment of the CoCos would be used by the Government to repay debt.