Permanent TSB seeks manager for €2bn loan book

PERMANENT TSB is inviting tenders for the management of its €2 billion commercial loan book, with banking services firm Certus the front-runner to be awarded the contract.

It is understood the bank’s management briefed staff on Friday about the move.

The loan book comprises borrowings linked to office, retail and industrial developments – this is now a non-core segment of Permanent TSB’s business as a result of its plans to create a leaner, smaller bank free of the “legacy” issues of the property bubble.

The State-controlled bank confirmed it was in discussions with a number of parties and said it had not yet taken a final decision on selecting a service provider.

It is likely that the contract will be awarded to Certus, the company set up by former Bank of Scotland (Ireland) managers.

A small number of Permanent TSB staff who work on the management of the loans are expected to transfer to the new loan service company under the Transfer of Undertakings (Protection of Employment) regulations.

“As this process has not concluded it would not be appropriate to speculate on matters such as this,” the bank said yesterday.

The State owns 99.5 per cent of Permanent TSB as a result of a €4 billion bailout.

As part of a major restructuring plan agreed earlier this year between Permanent TSB, the Department of Finance and the troika of the European Central Bank, International Monetary Fund and the European Commission, the bank agreed to focus on retail banking activities as its core business.

Under this plan, which is currently in train, viable consumer loans within Permanent TSB’s total loan book of €36 billion will remain part of the core, while troubled mortgages and other so-called uneconomic loans will transfer to an asset management unit, or “bad bank”. A third division will deal with its UK mortgages.

But Permanent TSB has now decided that management of the commercial property loan portfolio should be outsourced, as the loans are not only non-core but they are typically stressed, meaning much of the portfolio will require the specialist skills of distressed debt managers.

Certus, which was set up by the former management of Bank of Scotland (Ireland) to wind down its €29 billion loan book, has since added new clients.

It recently won a contract from Irish Bank Resolution Corporation to help it collect debts on the €1.8 billion residential mortgage book of the former Irish Nationwide Building Society – borrowings described by IBRC as “Ireland’s answer to subprime”.

Certus, which employs more than 800 people and is led by chief executive Joe Higgins, also has a contract with AIB to assist on mortgage arrears cases.