The proposed sale of PTSB to Austrian Bank Bawag has reached a crucial stage. Shareholders have voted in favour of the deal. The High Court has to give the go-ahead in a hearing due later this month and could face a demand from some minority shareholders for a separate vote.
Into this evolving picture came an unexpected development, when on Friday a corporate finance firm, Axis, said it was considering making a bid. This came late in the day – some 11 months after the bank was put up for sale.
Axis, co-founded by Mark Duffy – who previously headed Bank of Scotland (Ireland) – has promised to pay a higher price than Bawag. But, unusually, it as yet has no funders and no corporate finance advisers. Both would be expected from a potential bidder with serious intentions.
The Government and the bank’s board are thus correct to say they will stick to the plan to sell to Bawag. The High Court hearing on October 27th is the next step in this process. It remains to be seen if some minority shareholders will use the Axis expression of interest to try to bolster their case that the valuation of the Bawag bid is in question and that minority shareholders should be granted a separate vote on the sale.
READ MORE
A majority of these shareholders voted to accept the Bawag offer, but less than the 75 per cent normally required in such votes. The Government’s vote was thus vital. PTSB says it has strong legal advice that this was a correct procedure. Clearly it is now up to the High Court to decide.
The purchase of PTSB by a large, well-resourced EU bank would appear to be the best route to developing the bank and turning it into a genuine third force in the Irish banking market. This is important, as competition has been limited in some areas of the market in recent years , given the dominant position of AIB and Bank of Ireland. Smaller competitors have chipped away at parts of the market, but the huge deposit bases of the big players puts them in a strong position. A purchase of PTSB by Bawag is the best available route to addressing this.
