ANALYSIS:While Irish Life may have found a new home with Canadian life assurer GreatWest Lifeco, its former stable-mate Permanent TSB (PTSB) faces a more uncertain future.

The two companies were once joined together in the now-defunct Irish Life Permanent Group, but were separated in April 2011 when Irish Life was acquired by the State for €1.3 billion and PTSB was nationalised in a €4 billion recapitalisation programme.

Yesterday, the bank was downgraded by ratings agency Moody’s, reflecting “the uncertainty and the risks” it faces, while Fitch assigned Irish Life a rosier future.

So how did they get here?

Central to their fates is the fact that while Irish Life has remained profitable, even during the downturn, PTSB, for its part, faces severe problems in its loss-making tracker mortgage book – for which a solution has yet to emerge.

Last June, a restructuring plan for the bank was submitted to the European Commission by the Government. This would see the creation of a “core bank”, holding the bank’s deposits and about €14 billion in loans.

Non-core assets, including loss-making tracker mortgages and the bank’s commercial property loans totalling about €12.5 billion, would be placed in an “asset management unit”.

While this unit would stay in the bank in the short term, the possibility that it could be transferred to a third party, such as Irish Banking Resolution Corp, has been touted.

However, a response from the commission has, as of now, not been forthcoming, and there have been murmurs it is not in favour of such an approach.

Another blow to such plans comes from the surprise liquidation of IBRC, although the National Asset Management Agency could, potentially, also fulfil this role.

But there are some green shoots appearing for PTSB.

In January, it raised €600 million in a private deal backed by its UK mortgage book. And it also has a high level of capital, with a 18.1 per cent core tier-one ratio thanks to Government money.

To really get back on its feet, however, the bank will have to find some way to deal with its mortgage book.