PERMANENT TSB, the state-controlled lender, will raise as much as €180 million of capital by buying back residential mortgage-backed securities at a discount.
The bank, once the largest Irish home-loan lender, on September 13th offered to buy back about €1.2 billion of mortgage-backed securities issued by its Fastnet Securities 2 Plc vehicle at 30 cents to 72.5 cents on the euro. The company will raise €150 million to €180 million from the accord.
Results are scheduled to be released tomorrow. The accord, following similar RMBS buybacks by Ulster Bank and Bank of Ireland last year, will bolster Permanent TSB’s capital base as local banks’ mortgage-loan losses continue to rise. The State has injected €4 billion into the lender since the middle of last year to shore up capital reserves.
A spokesman for Permanent TSB declined to comment on the RMBS buyback.
Permanent TSB had a core Tier 1 capital ratio, a measure of financial strength, of 18.1 per cent at the end of June, compared with a minimum 6 per cent target set under an adverse scenario in Central Bank stress tests last year. - (Bloomberg)
