Approval of pemanent tsb Restucturing Plan

Headline: permanent tsb welcomes the approval of its Restructuring Plan by the European Commission

The European Commission (EC) has today announced the approval of the Restructuring Plan for the permanent tsb Group (the "Group"). The agreed Restructuring Plan and Restructuring Plan Term Sheet are consistent with the Group's own business plan. The approval marks an important and significant step in the recovery of the Group.

The Group Chief Executive of permanent tsb Group Holdings plc, Jeremy Masding, has today welcomed the decision of the EC. He said: "This is a very significant milestone for the Group and confirms the confidence of the EC in the long-term viability of the Group. The plan agreed is fully consistent with the permanent tsb Group's own business plan and we are very confident that we can achieve the various objectives and targets set out and return the Group to being a profitable, relevant and competitive force in the retail banking market in Ireland."

Mr. Masding expressed the appreciation of the Group to the Minister for Finance, the Department of Finance and the EC for their support and constructive engagement on this exercise over many months.

The Restructuring Plan Term Sheet sets out the terms for the restructuring of the Group, which Ireland and the Group have committed to implement and which includes the following elements:

Disposals

The Group will commit to dispose of the following loan portfolios, which are briefly described below:

· Capital Home Loans Limited (CHL) Mortgage Book: Subject to achieving an acceptable price, the CHL Mortgage Book, a UK residential mortgage portfolio which is mostly buy-to-let loans comprised mainly of Bank of England tracker mortgages. The CHL Mortgage Book has been closed to new business since 2008 and is in run-off. At 31 December 2014, it had mortgage loans of approximately €6.5bn (£5.0bn) (gross) outstanding.

· Non-Performing Irish Commercial Real Estate (CRE) Lending: The non-performing element of the Group's Irish CRE portfolio, which at 31 December 2014 comprised €1.67bn of Gross Loans.

Both portfolios form the majority of the Non-Core Business and have been clearly and formally designated as non-core by the Group for the past number of years. On 11 March 2015, the Group announced the signing of agreements to sell approximately £2.5bn of the gross outstanding loan balances of the CHL Mortgage Book together with the sale of the CHL loan servicing platform of the Group; and to sell €1.5bn of the Irish CRE portfolio. The Group is currently examining the opportunities for the sale of the remaining elements of the CHL Mortgage Book and non-performing Irish CRE portfolio.

Defaulted Irish Tracker Mortgages

The Group has also committed to reduce the value of defaulted Irish tracker mortgages through a combination of measures, including cures and asset sales, by a pre-determined date and according to a pre-determined schedule.

Behavioural Commitments

The Group has agreed to certain behavioural commitments, including:

· Restructuring of the Group: The Group has committed to report on and monitor the performance of the Core Bank and the Non-Core Business separately (and this is consistent with the Group's current structure);

· Capital Raise: The Group has committed to completing the announced Capital Package to raise €525m of Tier 1 capital from private investors, consistent with the Group's Capital Plan and ECB requirements;

· Portfolio Restructuring: The Group has committed to deliver on mortgage treatments for non-performing loans relating to residential mortgages (and these measures are broadly consistent with those prescribed by the Central Bank of Ireland);

· Balance Sheet Limitation: The Group has committed to limit the maximum size of its balance sheet;

· Marketing and Advertising: The Group has committed not to use state aid for marketing and advertising purposes, and has agreed to a pre-determined maximum level of marketing and advertising expenditure per annum;

· Acquisition and Scope of Business Restrictions: The Group has committed not to acquire any undertaking (except for specific limited exceptions or with the explicit consent of the EC);

· Exposure to Irish Sovereign Bonds: The Group has committed to limit its holding of Irish sovereign bonds to pre-determined limits;

· Cost to Income Ratio: The Group has committed that, subject to certain exceptions, the Group's cost to income ratio and Annual Operating Expenses will not exceed pre-determined limits;

· Competition Measures: The Group has committed to make available a service package to other banks and financial institutions comprising a range operational services and a customer mobility package to facilitate relevant competitors communicating with some of the Group's customers directly, including by the provision of advertising material, where the Group's market share exceeds pre-determined thresholds;

· Geographical Participation: The Group has committed to restrict its activities outside of Ireland to pre-determined boundaries (which is consistent with the Group's strategy);

· Payment of Dividends: The Group has committed to limit distributions, and will not pay any dividends until the Contingent Capital Notes are converted, redeemed or repurchased and will not pay dividends in circumstances which will compromise the ability of the Group to meet its commitments under the Restructuring Plan Term Sheet; and

· Diversification: The Group has committed not to deviate materially from its current activities.

Implementation

The measures will be required to be implemented over various time-frames until 31 December 2018.

NOTE:

EC approval for a Restructuring Plan for the Group was required as the Group received significant support from the Irish State in the context of the financial crisis and because of its systemic importance to the Irish financial system. As a result of these State support measures, the Minister for Finance of Ireland acquired 99.2 per cent. of the issued ordinary shares of permanent tsb Group Holdings plc together with €400m of Contingent Capital Notes, and thus the Group has been the subject of a review by the EC under EU State aid rules. As part of the EC review, a Restructuring Plan was prepared by the Group and submitted by the Irish Government to the EC. Any such Restructuring Plan is required to contain measures to limit any distortions of competition resulting from State aid received by the Group, as well as measures to support the long-term viability of the Group.

Ciarán Long

Group Secretary

Media:

Gordon MRM

[email protected]

Contact:

Ray Gordon +353872417373

David Clerkin + 353878301779