State to retain majority ownership of Permanent TSB

Permanent TSB is likely to remain in majority State ownership after its €525 million capital raising plan has been completed in July, its chief executive Jeremy Masding said yesterday.

Speaking to the media after a stormy two-hour annual meeting of shareholders in Dublin, Mr Masding said he had been “tasked” by the Minister for Finance Michael Noonan at the start of the funding process to ensure that the bank remained majority owned by the State by the end of the capital raising.

“As of this morning, I am confident that we can deliver on that objective,” Mr Masding said.

PTSB is seeking to raise the funds from private investors to plug a €125 million capital hole identified by the European Central Bank’s stress tests last year and to re-purchase the State’s €400 million in contingent capital notes.

Mr Masding said the company has met 95 potential investors to date across Europe and the US, and that this figure would pass the 100 mark by the end of this week.

He said the company was “narrowing down” its options and would share details on its plan in the “next few weeks”.

Mr Masding said a private placement and an IPO of shares are the options being actively considered. When asked if an IPO might involve a full stock market listing in Dublin and London, he said: “I hope so, yes. I think it’s important ...that investors see it as a property functioning, viable institution.”

Mr Masding said there were no current plans to reduce its 4.5 per cent standard variable mortgage rate, which was the subject of much shareholder anger during the AGM.

Brendan Burgess, a consumer advocate, described it as an “outrageous margin” given that the average rate across the euro zone was just 2.09 per cent, and that new PTSB mortgage customers could avail of lower variable rates in certain circumstances.

Mr Masding said he has not been pressured by the minister for finance to reduce its mortgage rate, which has been the subject of much controversy in recent weeks.

“The minister doesn’t intervene in the commercial running of the business, that’s absolutely clear,” he said.

Mr Cook had earlier reminded shareholders that PTSB was a loss-making institution and that any mortgage product had to be profitable. He said its mortgage rate was decided by a number of factors including the the cost of capital and costs associated with the risks attached to previous lending decisions. This includes its its loss-making tracker book.

“Our objective is not to create a situation ...where we’re losing more money by lowering interest rates,” he said.

Mr Cook told the AGM that PTSB was now in “better shape” than at any time in recent years with “a clear line of sight towards a return to profitability”.

Mr Masding said it was focusing on a return to “sustainable” profit in 2016/17. He declined to tell shareholders when it might reinstate its dividend.

A number of shareholders, including former non-executive director Piotr Skoczylas, accused Mr Cook of breaching company law with the special resolutions proposed by the company at the AGM to pave the way for its capital raising.

Mr Cook said the bank was happy that all of its resolutions were lawful. With the State voting its 99.2 per cent holding in favour of each resolution yesterday, they all passed comfortably.

Mr Cook said potential investors had been informed that Mr Skoczylas and a large group of other PTSB shareholders have a case pending before the European Court of Justice in relation to recapitalisation of the bank in 2011. This gave the State a 99.2 per cent shareholding in the bank and wiped existing investors.

Mr Skoczylas and the other investors claim the minister’s shareholding is illegal. This claim is rejected by the State and PTSB.