Shares in Permanent TSB soared to a five-month high after it emerged the lender is in advanced talks to sell its remaining £2.5 billion (€2.8 billion) of mainly UK buy-to-let loans.
US private-equity firm Cerberus has been selected as preferred bidder for the Capital Home Loans mortgage portfolio, according to sources, confirming a Reuters report. Cerberus bought the other half of CHL’s loans last year.
Shares in PTSB soared as much as almost 5 per cent to €2.31, their highest level since May, though the stock remains almost 50 per cent off the level at which the bank and the Government sold shares in the group last year.
A spokesman for PTSB declined to comment on the process.
The development came days after stockbroker Davy upgraded its rating on PTSB shares to “outperform”, saying it believed the bank could sell the remaining UK loans within a year, having previously pencilled in a deal by mid-2018.
The more optimistic view was a result of a surprise recovery in the residential mortgage-backed securities (RMBS) market, which the likely buyer would likely use to fund such a portfolio. Last week, Cerberus announced an RMBS sale directly backed by some of the CHL loans it had bought last year.
Goodbody Stockbrokers analyst Eamonn Hughes said the news, coupled with the UK government’s move to restart the sale of £15.7 billion of mortgage loans of now-defunct lender Bradford & Bingley, indicate that “interest in the sector is starting to improve after the sell-off post the Brexit vote”.
Portfolio
PTSB had agreed with competition authorities in Brussels, following its State €4 billion bailout during the financial crisis, to sell off the remaining loans in the UK portfolio by the end of June. However, the UK’s decision to hold a referendum on EU membership and the subsequent vote to quit the EU cast doubt over when the sale might happen.
The current agreement with the European Commission is that PTSB does not have to sell at any more than a 10 per cent discount to the UK loan book’s value.
Cerberus has been among the most active buyers of loans from Irish banks and Nama in recent years, most notably via its controversial acquisition of Nama’s Northern Ireland portfolio Project Eagle at a discounted price of about €1.6 billion in 2014.
The transaction is subject to a number of investigations, mainly around how €7 million of fees linked to the deal ended up in an Isle of Man bank account linked to a Belfast lawyer.
All parties have consistently denied any wrongdoing in relation to the deal.
Last week, it emerged that PTSB had completed the final stage of its €2.8 billion deleveraging programme of non-core assets in Ireland, with the sale of a last portfolio of loans. The final sale was of commercial real-estate assets with a face value of €300 million.
