NatWest and Irish government sell 10% of lender Permanent TSB

NatWest Group and the Irish Treasury receive EUR 110.5 million after the sale of 10% of lender Permanent TSB

  • NatWest and the Irish government each earned £47.5 million from the share sale
  • Permanent TSB was effectively nationalized during the Irish banking crisis
  • Both parties initially planned to each divest a 3% stake in Permanent TSB

NatWest and the Irish government jointly sold a 10 percent stake in Permanent TSB due to increased interest in the company’s shares.

The British banking giant and the Irish Treasury have each made €55.2m (£47.5m) from the sale of nearly 55m shares between them in the financial services company.

Both parties initially stated on Thursday that they planned to each unload a 3 percent stake, but ended up auctioning more due to higher-than-expected demand.

Offloading: NatWest and the Irish government each earned €55.2m (£47.5m) by selling nearly 55m shares in Permanent TSB together

Shares in PTSB have soared over the past year after successive rate hikes by the European Central Bank and the takeover of part of Ulster Bank’s loan portfolio significantly boosted the group’s income.

These factors helped the company recover to a profit of €267 million for 2022 from a loss of €22 million last year.

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

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

Michael McGrath, Ireland’s finance minister, said the transaction “will help improve liquidity and interest in the bank as we continue to prepare for a broader sales program in the coming years.”

He added: “As I have said before, the government believes that banking is an activity that should primarily be provided by the private sector and that taxpayers’ money used to recapitalize the banks should be recovered and used for more productive purposes.”

PTSB, formerly the banking division of Irish Life & Permanent, experienced difficult times during the Irish banking crisis due to the large number of losing mortgages on its books.

It was effectively nationalized in 2011 under a €4 billion recapitalization plan, the same year the company posted a loss of €424 million.

Shortly after Jeremy Masding was named CEO the following year, the European Commission approved the company’s restructuring plan, which included job cuts and significant deleveraging.

The lender finally returned to profitability in 2015, completing its deleveraging plan after selling its remaining UK loan portfolio to investment group Cerberus Capital Management.

NatWest first took a stake in PTSB two years ago when the latter purchased approximately €7.6 billion in loans and assets and 88 bank branches from Dublin-based subsidiary Ulster Bank.

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

Ulster Bank announced more than 800 redundancies last week after closing its entire branch network in the Republic of Ireland in April.