herald

Monday 5 December 2016

State sells off 25pc of Permanent TSB in IPO

The State has sold 25pc of its stake in Permanent TSB (PTSB), raising around €400m.

Some €125m was raised through high-risk bonds that automatically convert into shares if the bank gets into trouble.

Some investors said the fact that an Irish bank that has failed stress tests could sell such risky bonds shows how far the banking sector has come in the past year.

PTSB had set a range of €3.90 to €4.50 per ordinary share for the issue, a key test of investor appetite for the sector and for Allied Irish Banks ahead o f a possible stake sale in the next 12 months.

Finance Minister Michael Noonan said the €525m raise was a "significant milestone" in the bank's recovery.

recoup

"Completion of the capital raise will enable PTSB to further progress its restructuring plan and to maximise the return for the State on its equity investment," the minister said.

Mr Noonan said that as part of the transaction, the State will recoup €509m in capital receipts from the sale of shares and the repurchase of the so-called Contingent Capital Notes.

This brings the total capital receipts from PTSB to €1.8bn since the State's investment.

"As a result of much hard work, over 45pc of the capital invested by the State will have been repaid before taking account of investment income, guarantee fees and our residual shareholding," Mr Noonan said.

The move is the latest step in a long campaign to restore the bust bank.

Earlier this month, PTSB reduced the number of shares by 99pc in a so-called stock consolidation.

That did not change the ownership stake in the bank. However, it means that every 100 old shares have been replaced by one new share.

New share certificates have been issued to shareholders, and existing share certificates will be invalid and will be cancelled.

Permanent TSB is the biggest mortgage lender in Ireland.

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