BAWAG Group will buy Irish retail lender Permanent TSB for 1.62 billion euros ($1.92 billion) in a deal that will widen the Austrian bank’s European footprint and allow the Irish government to exit its last bank holding from the financial-crisis era.
The deal will also potentially reshape competition in the country’s concentrated banking market by creating a stronger challenger to dominant players AIB and Bank of Ireland. PTSB is, by far, the smallest of these three Irish banks that emerged from the euro zone’s largest state rescue more than 15 years ago.
“The announcement represents the most significant development in the Irish retail banking market in over a decade,” Irish Finance Minister Simon Harris said in a statement.
The government plans to vote in favour of the deal, which also has the support of the board of PTSB.
BAWAG will pay 2.97 euros per PTSB share in cash to expand its operations in Ireland, where it owns the tiny Irish mortgage start-up MoCo, enabling the government to dispose of its 57.5% stake for about 931 million euros in proceeds.
That will leave the government at a 300-million-euro loss on the 4-billion-euro bailout PTSB required in 2011, a spokesperson for the finance ministry said.
However, the state is 1.3 billion euros above break-even on the near 30 billion euros invested into all three surviving banks, the ministry added.
Another 34 billion euros was never returned after being swallowed up by two failed lenders.
Shares in PTSB fell 5% to 2.87 euros. The agreed price came in 1.7% below where the shares were trading at before the announcement but marked a 26% premium compared to when the formal sale process was launched in October.
FIRST MAJOR ACQUISITION BY FOREIGN LENDER SINCE BANK CRASH
BAWAG’s entry into the rebuilt Irish banking system also marks the first major acquisition by a foreign lender since a number of foreign banks quit after suffering big losses during Ireland’s banking crash in 2008.
BAWAG, which has expanded through a string of deals in Austria, Germany, Switzerland, the Netherlands and the U.S. over the last decade, said it intends to invest meaningfully in the mortgage-focussed Irish lender.
Austria’s fourth-biggest bank is also committed to maintaining a “meaningful” branch presence in Ireland — a politically sensitive part of the process — while also carrying out a detailed review to identify areas for operational efficiency and synergies.
At 75%, PTSB’s cost-to-income ratio is far higher than its rivals.
“PTSB will be transformative in advancing our vision to build a pan European and U.S. banking group,” BAWAG CEO Anas Abuzaakouk said, describing Ireland’s “robust banking sector” and strong economy as very attractive.
PTSB said it attracted six initial prospective bids when it launched the process, including Lone Star and a consortium comprising fellow U.S. private equity funds Sixth Street and Centerbridge Partners.
The transaction is expected to close in the fourth quarter of 2026 or the first quarter of 2027, subject to regulatory approvals.
Source: Reuters.com