NatWest and Irish government sell 10% of lender Permanent TSB

NatWest Group and Irish finance ministry receive €110.5m after selling 10% of lender Permanent TSB

  • NatWest and the Irish government earned £47.5m each from the share sale
  • Permanent TSB was effectively nationalised during the Irish banking crisis 
  • Both parties initially intended to each offload a 3% holding in Permanent TSB

NatWest and the Irish government have jointly sold a 10 per cent stake in Permanent TSB amidst heightened interest in the firm’s shares.

The British banking giant and the Republic of Ireland’s Department of Finance have earned €55.2million (£47.5million) each from selling almost 55 million shares betwen them in the financial services provider.

Both parties initially declared on Thursday that they intended to each offload a 3 per cent holding but ended up auctioning more due to larger-than-expected demand.

Offloading: NatWest and the Irish government have earned €55.2million (£47.5million) each from selling almost 55 million shares between them in Permanent TSB

Offloading: NatWest and the Irish government have earned €55.2million (£47.5million) each from selling almost 55 million shares between them in Permanent TSB

Shares in PTSB have soared in the past year after successive interest rate hikes by the European Central Bank and the acquisition of some of Ulster Bank’s loans book significantly boosted the group’s income.

These factors helped the company rebound to a €267million profit for 2022 from a €22million loss the previous year.

Following the transaction, the Irish state will continue to own 57.4 per cent of PTSB, while NatWest’s stake will decline to 12.6 per cent.

Until this week, the Irish government had not sold any PTSB shares since 2015, when its shareholding was reduced from 99 per cent to 75 per cent.

Michael McGrath, Ireland’s minister for finance, said the transaction ‘will help improve liquidity and interest in the bank as we continue preparations for a wider disposal programme in the coming years.’

He added: ‘As I have previously stated, the government believes that banking is an activity that should be provided primarily by the private sector and that taxpayer funds which were used to recapitalise the banks should be recovered and used for more productive purposes.’

Formerly the banking division of Irish Life & Permanent, PTSB experienced hard times during the Irish banking crisis due to the high volume of loss-making mortgages on its books.

It was effectively nationalised in 2011 under a €4billion recapitalisation scheme, the same year the business recorded a €424milllion loss.

Soon after Jeremy Masding was made chief executive the next year, the European Commission approved the firm’s restructuring plan, which included job cuts and a significant deleveraging scheme. 

The lender eventually returned to profitability in 2015 and finished the deleveraging plan following the sale of its remaining UK loan book to investment group Cerberus Capital Management.

NatWest first took a stake in PTSB two years ago when the latter bought around €7.6billion of loans and assets and 88 bank branches belonging to Dublin-based subsidiary Ulster Bank.

Friday’s share sale forms part of NatWest’s strategy to exit the Irish market, where it has struggled with profitability and cost-cutting measures, in order to focus on the UK business and free up excess capital.

Ulster Bank announced more than 800 redundancies last week, having shut down its entire branch network across the Republic of Ireland in April. 

Read More

Leave a comment

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More