Permanent TSB plans listing on Dublin market

Permanent TSB intends to seek a primary stock market listing in Dublin as part of its plan to raise €400 million through a placing of new ordinary shares and €125 million via an additional tier 1 capital instrument.

In addition, it will take a secondary listing in London and cancel its membership of the junior ESM market in Dublin.

It might also request the Government to sell some of its shares to achieve a minimum 25 per cent free float of shares on the stock market, to meet certain eligibility requirements for a main market listing.

This would likely result in the Government retaining at least 75 per cent in PTSB compared with its current holding of 99.2 per cent.

The placing and issuance of debt is expected to be completed within the next four weeks.

Existing retail shareholders, who own less than 1 per cent of the bank between them, will be offered the opportunity to subscribe for additional shares in an open offer at the same price as institutional shareholders. The open offer is expected to close by the end of May

PTSB’s chief executive Jeremy Masding said the capital raising plan was the first step in returning the bank to private ownership. “We are greatly encouraged by the significant level of investor interest that we have seen to date,” he said.

The Department of Finance said it was “pleased with the comprehensive nature of the process carried out [by PTSB] to date and the strong indications of interest from investors”.

“Over the remainder of the process, the department will continue to provide oversight to ensure the best possible outcome for the State,” it added.

The funding from the capital raising exercise will be used to plug a €125 million capital hole identified last year in European Central Bank stress tests, and €400 million to repurchase the State’s contingent capital notes.

In a trading update, PTSB said business continues to “improve” aided by the recovering Irish economy.

New mortgage drawdowns rose by 16 per cent year on year in the first quarter while more than 10,000 current accounts were opened. Term lending has grown by more than 50 per cent in the period.

In terms of mortgage arrears, PTSB said it also saw “lower level” of new defaults and management expects this trend to continue for the remainder of the year.

The group has also seen a further reduction in levels of home loans and buy-to-let mortgage arrears over 90 days. These are now 37 per cent lower than the peak level in August 2013.

For owner-occupier home loans, its arrears over 90 days were 9.9 per cent at the end of the first quarter compared with 10.7 per cent at the end of December. For buy-to-lets, the figure was 12.8 per cent compared with 13.6 per cent at end December.

“Management continues to review the appropriateness of the group’s provision levels and the potential scope for further write-backs through both operational performance improvements and model recalibration (including the residential house price index),” the bank said.

Editorial Comment, page 14, main paper