It’s only 6th January and I must need a break; it can only be paranoia that the transcript of the appearance of the Permanent TSB public interest directors before the Oireachtas finance committee on 19th December 2012, is not yet available three weeks after the grilling by TDs and senators. This despite the fact that the appearance of the Bank of Ireland and AIB directors on 20th December 2012 was made available yesterday, and that it seems the sound is not available on the Oireachtas video record. You see, I though Ray MacSharry told the Committee that the two large bonds that fall due for payment in January and April 2014 and which come to a total of €2.7bn, would be “rolled over”. It is understood that this is not the position of PTSB, but I have been waiting for the transcript for three weeks now.
And just to intensify the paranoia, we today have a curiously-timed press statement from PTSB which promises major new lending in Ireland. That is welcome of course, we need credit and the deleveraging by banks, the stricter lending criteria and the basic unavailability of credit have all been strangling recovery. So it’s good news, even if it is being published on a Sunday. The bank has concluded it can increase its lending partly because of the “success in doubling the size of its deposit book to approximately €12 billion in the past few years” but PTSB, or Irish Life and Permanent as it was then, bought €3.6bn of deposits from Irish Nationwide Building Society in February/March 2011, and that accounts for most of the increase, and that is nearly two years ago. Maybe I should just walk around with a tinfoil cap.
Today, PTSB says it is providing “approximately €350m into the mortgage market, €100m into personal lending (including car finance) and €5m in new Credit Card finance.” But hang on a second, it was only a month ago when PTSB sold a €300m car loan business to Deutsche Bank at a book loss of €64m – why get back into that business after just selling it at a loss? Maybe I need more than a tinfoil cap.
What can’t be disputed is the update on profitability and PTSB today says “our key aims are to re-establish permanent tsb as a significant third player in the Irish banking market and to return to profitability in 2016.” PTSB was saying just three months ago that it would return to profitability in 2014. This is what the Irish Examiner reported in August 2012 – “Speaking following the results, Mr Masding said he expected the bank to return to profitability at the end of 2014 or the beginning of 2015.”
The betting in some parts of the industry has been that PTSB will need an additional bailout and that is politically taboo – not even Leo Varadkar would be able to justify it, after he qualified his “not another red cent” comment during the General Election campaign of 2011 by saying he was referring to a red cent on top of the stress tests in March 2011. After those stress tests, Irish Life and Permanent was bailed out with €4bn of our money. If we have to provide an additional bailout, then some might think that crosses a line.
PTSB will be closely watched in coming days. And there will be a blogpost on here when the transcript of the 19th December 2012 hearing is finally published by the Oireachtas.
€350 Million will not even scratch the surface of Ireland’s need for debt finance. In 2007 Anglo alone was lending €300 Million a week. It’s sad and pathetic that they should brag about this as an achievement.
great post, keep it up.