Permanent TSB warns that Ulster Bank negotiations will take a long time
EO Eamonn Crowley said today that the negotiation process “is unlikely to be completed before the end of the year” and “there could be many pitfalls along the way”.
The PTSB has only had high-level discussions with the Treasury Department about a possible deal as the bank “has nothing to present to them at this time,” he said.
Mr Crowley said that PTSB is making a multi-year commitment to Ulster Bank and that he still has no business case or proposal to present to the board of directors or Treasury Secretary Paschal Donohoe, who controls a 75 percent stake in the bank.
“It is too early to answer Ulster Bank’s question. We don’t have a proposal yet. We are examining options and need to understand them.”
Nonetheless, Mr. Crowley made it clear that he has ambitions to acquire significant assets from Ulster Bank in order to leverage PTSB’s existing infrastructure and expand his franchise.
“We’re already in this business [retail and SME banking]. The infrastructure is there. It’s about how we scale and manage this so that it doesn’t add complexity or additional challenges. “
He said he believed the current poor business environment for the banking industry would improve over the next few years so that PTSB could benefit from adding the underperforming businesses of Ulster Bank to its own offering.
Permanent TSB posted a pre-tax loss of € 166 million for 2020, mainly due to the negative impact of the pandemic on the loan book.
The bank has provided a valuation allowance of € 155 million to deal with potential losses related to Covid-19.
According to PTSB, its $ 1.1 billion non-performing loans (NPL) increased about $ 80 million year over year, with the NPL ratio increasing about 120 basis points to 7.6 percent. The increase in the NPL ratio is mainly due to the reduction in gross loans due to the Glenbeigh II performing loan sale transaction.
The total new lending of around 1.4 billion
“Strong” lending led to an increase in new mortgage drawdowns of 43 percent compared to the first half of 2020, especially in the second half of the year.
Mortgage applications also increased significantly in the second half of 2020, it said. The bank said its new mortgage loan market share was 15.3 percent.
Net interest income – an important benchmark for the bank’s performance – was 4 percent lower than in the same period of the previous year.
The bank’s operating costs of 329 million euros, of which 5 million euros are Covid-19 costs, are 1 million euros.
“Despite the challenges 2020 brought, I am confident that the bank is in a strong position to capitalize on the opportunities that will arise in the post-pandemic recovery,” said Crowley.
“While 2020 was a year of loss for the bank, the bank increased its new loan volume and transaction activity in the second half of the year as the economy began to re-open. Our active mortgage supply pipeline is strong and positions us well to continue our strong performance in 2021. “
Last year the PTSB raised 31 million. This program focuses on organizational structure, digital working methods and a real estate footprint review.