19th Jul 2024 18:54
(Alliance News) - Permanent TSB Group Holdings PLC on Friday said it has offloaded a portfolio of non-performing loans, which opens up its coffers for more lending.
The deal is part of a consortium arrangement with Mars Capital and certain funds managed or sub-advised by Apollo Global Management.
The deal boosts Permanent TSB's common equity tier one ratio by around 35 basis points, and its total capital ratio by 45 basis points.
"This transaction also alleviates the negative capital impact of regulatory calendar provisioning associated with this Portfolio, which based on existing risk weights and capital requirements is equivalent to EUR2 billion of new lending," it added.
The portfolio, which comprises 1,244 loan accounts secured on 1,489 properties, has a balance sheet value of EUR348 million.
Chief Executive Officer Eamonn Crowley said: "PTSB is undertaking this transaction to ensure that we remain a strong and resilient competitor in the Irish retail banking market, offering much needed choice to customers. Like other retail banks, PTSB is required by regulation to hold additional capital for non-performing loans, meaning that the amount that can be lent to first time buyers and other personal and business customers would have been impacted if this transaction had not occurred. As a result of today's announcement, we will be able to free up capital that will be used to support up to EUR2 billion of lending into the Irish economy."
Shares in Permanent TSB rose 3.2% to EUR1.44 each in London on Friday afternoon.
Davy analyst commented: "Permanent TSB's CET 1 ratio grew to 14.3% in Q1 from 14.0% at FY 2023 and this transaction provides further momentum on growth in H2 and compares with a company target of greater than 14%. This will support both new lending and capital distributions. PTSB is due to communicate its distribution policy with its H1 results and this potentially opens the possibility of a distribution with FY 2024 results relative to our current forecast of distributions commencing in FY 2025."
By Eric Cunha, Alliance News news editor
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