PTSB bank has been put up for sale. Our Economics and Public Affairs Editor David Murphy explains its impact.
What will this mean for consumers?
In the short term, it won't mean any change. The bank says its mortgages, deposits, current accounts and banking app will operate as normal.
But in the longer term, if PTSB is taken over by another bank, it could mean more competition if the new owner decides to challenge the two big players Bank of Ireland and AIB.
That could result in lower fees on bank accounts, better returns for savers, and lower rates for borrowers.
What exactly is happening?
PTSB is 57% owned by the State after it was bailed out by the taxpayer after the financial collapse. The bank has now put itself up for sale.
That would mean the State’s shareholding would be sold, and other investors owning 43% would have to agree to a deal. The most likely outcome is the entire bank would be taken over.
Will the taxpayer get all its money back when it bailed out the bank in the financial crash?
The State would be lucky to get all its money back.
The taxpayer put €4 billion into the bank to rescue it from collapse in 2011. So far, €2.75bn has been returned through the sale of the bank’s life assurance company Irish Life, share sales, fees and interest payments.
Shares in PTSB rose sharply today, which means at current levels the State’s stake is worth about €860m. If the taxpayer’s stake was sold at today’s price, the taxpayer would be down almost €400m.
Who would want to buy PTSB?
It is Ireland’s third largest bank in a market dominated by Bank of Ireland and AIB, both of which are highly profitable. It is quite possible a foreign player will come into the Irish market attracted by money made by big two incumbents.
But it is not that simple. Several foreign banks were badly burnt during the 2008 financial crisis and closed their Irish operations.
UK’s NatWest bailed out its Irish subsidiary Ulster Bank with £15bn and subsequently closed the operation, and Bank of Scotland Ireland, which was owned by Lloyds, also shut. Others to pull out were Denmark’s Danske Bank, Dutch-owned ACC Bank and Belgium’s KBC.
So, foreign banks may be unenthusiastic about entering the Irish market. But the Irish economy has fully recovered from the financial crash and is now powering ahead.
Unemployment is low, the jobs market is strong, and property prices continue to rise. PTSB says there has been increased interest in it from foreign investors, and the time is right to sell.
So, has the State retrieved most of its money from bailing out the banks?
Absolutely not. A large portion of the €64.1bn sunk into the banks will never be retrieved.
The most egregious boomtime lenders were Anglo Irish Bank and Irish Nationwide. The State put €34.5bn into the pair. Of that, €1.1bn has been returned. The remaining €33.4bn is an irrecoverable "sunk cost", according to the Department of Finance.
The State poured €20.8bn into AIB and recovered the vast bulk of it, but the taxpayer is still down €750m.
Bank of Ireland has returned all the money used to rescue it to the taxpayer.
