Permanent TSB has announced a 0.5% cut in its standard variable interest rate.

The move follows agreement last week from the EU/IMF troika for a plan to split off about €12bn in loss making loans into a so-called bad bank.

From 14 May, PTSB will drop its interest rates for standard variable rate loans by half a percentage point, from 5.19% to 4.69%.

The change will apply to some 74,500 owner occupiers, not buy-to-let landlords.

Customers with tracker mortgages, which follow the ECB interest rate, are not affected by the move.

The bank says the change will save customers about €26 a month for every €100,000 borrowed.

Chief executive Jeremy Masding said the change was part of plans to create a more competitive bank with a viable future.

He said the bank will keep all lending rates under review.