Permanent TSB plans to resume dividend payments to investors

Permanent TSB plans to seek High Court approval for a reorganisation of its share premium account to pave the way for it to resume dividend payments to investors, possibly from 2019 onwards.

This emerges from documents sent to shareholders to inform them of the company’s annual general meeting on May 10th in Dublin. One of the motions seeks shareholder support for a reduction in the company’s share premium account.

Under Irish company law, dividends on ordinary shares may only be paid from distributable reserves. This requirement is independent on whether the company has sufficient cash to actually pay a dividend.

At present, PTSB is unable to pay dividends due to the lack of distributable reserves. It now wants to reallocate its share premium to reserves which would allow for a dividend payment in the future. The sum involved is understood to be about €330 million.

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This move first requires the support of shareholders, which is assured given that the State owns 75 per cent of the company, followed by the approval of the High Court.

No dividend is expected to be declared either this year or in 2018, the document states.

In addition, PTSB wants to cancel some 3.6 billion deferred shares, which are a legacy of its capital reorganisations in 2011, when the State bailed out the former Irish Life & Permanent, and an initial public offering of shares in 2015 that resulted in the Government selling a 25 per cent stake in the bank to institutional investors.

Cancelling these shares will result in an aggregate payment of €1.5 million to about 138,000 small investors in PTSB. This will result in small payments to shareholders – just 15 cent for those owning 300 shares in the bank – with PTSB stating that it would make arrangements for the repayment cheques to be “cashed without charge” in its branch network.

Separately, some 49 small shareholders in PTSB, including former director Piotr Skoczylas, have lodged a plenary summons with the High Court seeking damages from the Minister for Finance for losses they suffered when the State took control of 99.9 per cent of IL&P's shares in 2011 as part of a €4 billion its bailout.

Mr Skoczylas and other investors have been pursuing related legal actions against the State for a number of years.