In 2011 the State invested €2.3bn in cash in return for ordinary shares and invested €0.4bn in contingent capital notes in Irish Life and Permanent (now Permanent TSB). The State subsequently acquired Irish Life, the life assurance subsidiary of Irish Life and Permanent for a cost of €1.3bn in 2012. The acquisition completed the recapitalisation required following the PCAR stress test performed by the Central Bank in 2011which resulted in the State owning 99.2% of PTSB. In July 2013 the State sold Irish Life to Great-West Lifeco for €1.3bn. Prior to the close of the sale the State had received a dividend of €40 million. The State’s total investment in Permanent TSB and Irish Life is therefore €4.0bn.
SMU’s objective is to protect the State’s investment in Permanent TSB (“PTSB”) by ensuring it returns to profitability as quickly as possible and minimises the cost of legacy assets consistent with an approach that supports the sustainable recovery in the Irish economy. The Minister for Finance has high level oversight over the direction of the bank, but under the Relationship Framework between the State and the bank, day to day management decisions are a matter for the board and management of the organisation. Consistent with Government Policy, SMU’s role is to ultimately return the bank to private ownership in a manner which maximises value for taxpayers.
Following the results of the SSM Comprehensive Assessment in late 2014, PTSB was required to raise new capital. In May 2015, PTSB completed a capital raise of €402 million equity by way of a Placing to new institutional investors and an Open Offer to existing shareholders along with €125 million Additional Tier 1 debt issuance, in total raising €527 million new capital. In April 2015 the European Commission approved the PTSB Restructuring Plan which was an essential prerequisite to the capital raise.
Following the capital raise, PTSB repurchased the contingent capital notes for which the State received €410.5 million plus accrued interest. As part of the capital raise the Minister was requested by the bank to sell shares to enable PTSB meet the free float requirements of the main market listings on the Irish Stock Exchange and London Stock Exchange. As a result the Minister sold shares with a value of €97 million through a secondary offering.
The State has now received €1.8bn of capital receipts from the sale/repurchase of its investment in 2011-2012 and retains a 74.92% shareholding in PTSB.