NatWest Group has raised €126 million from the sale its remaining 11.7 per cent stake in PTSB as it seeks to draw a line under its involvement in the Republic’s banking sector.
The UK banking group received an original 16.7 per cent stake in PTSB in late 2022 as part payment for Ulster Bank loans it sold to the Republic’s smallest remaining domestic bank. It subsequently sold down part of the stake two years ago.
The total generated from selling PTSB shares amounts to €181.2 million.
Goldman Sachs and JP Morgan placed the shares with institutional investors on behalf of NatWest after the end of trading in Dublin and London on Monday at €1.98 per share, representing a 5.6 per cent discount to the closing price.
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“It demonstrates that there is a strong market appetite to invest in PTSB, and confidence in our strategic direction to deliver real and sustainable value for our shareholders,” said Eamonn Crowley, chief executive of PTSB.
“I would like to take the opportunity to thank NatWest for their support for PTSB over the last few years, in particular their role in supporting our acquisition of Ulster Bank businesses in Ireland.”
The move comes within weeks of Ulster Bank Ireland returning its banking licence to the Central Bank at the end of June, after 165 years in the Republic.
The company was renamed Ulydien DAC and will operate as a retail credit firm as it continues a “phased and orderly” withdrawal of its operations.
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Ulster Bank received an effective £15 billion (€17.6 billion) bailout from British taxpayers during the financial crisis. The rescue bill equated to a third of the total UK government’s £45 billion 2008 bailout of NatWest, back when the group was known as Royal Bank of Scotland.
Ulster Bank has paid €1.59 billion of dividends to its UK parent over the past two years as it sought to free up much of its remaining surplus capital. It had a little over €300 million of equity on its balance sheet at the end of December, after it also racked up €707 million of net losses over the past two years as part of the wind-down.
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Ulster Bank also paid €3.5 billion of dividends to its parent between 2016 and 2019.
Adding the dividends paid over the past nine years, the proceeds from the PTSB share sales, and the remaining equity in Ulster Bank suggests NatWest will end up recovering less than a third of Ulster Bank’s rescue bill.
While the Irish Government has an agreement in place with NatWest that allows both to sell shares at the same time as the UK lender, Minister for Finance Paschal Donohoe has decided not to sell down taxpayers’ 57 per cent interest at this time.
Shares in PTSB had advanced 56 per cent in the 12 months leading up to the latest stake sale.
This had been amid relatively high interest rates, a robust domestic economy, and as investors expect the bank to secure approval from the Central Bank to lower the amount of expensive capital it must hold against its mortgage book.
The Irish Government, which owns 57 per cent of PTSB, has committed to not sell shares in the bank for at least 90 days after the NatWest placing.
“From a PTSB perspective, we view the news as a positive development,” said Goodbody Stockbrokers analyst Denis McGoldrick. “The exit of a material holder will significantly improve liquidity in the stock.”
Davy analyst Diarmaid Sheridan said that PTSB is “well positioned” to return to paying dividends to shareholders for the first time since the crisis as it looks to ease its capital requirements and boost profitability. PTSB has signalled that it may make a dividend payment early next year.
