Irish Life and Permanent is expected to face selling its profitable life and pensions operation but this will not affect pension or insurance policy holders

The sell off is expected as part of a commitment to try to raise money under the bank stress tests.

IL&P have around 1m customers across the group including about 180,000 residential mortgage customers, 730,000 insurance policy holders and 200,000 pension scheme members. 

 

The bank has got into difficulty following new stress tests performed by Blackrock Consulting who are looking at potential future losses on residential and buy-to-let mortgages over the next 25 years. 

This is said to have exposed a potential funding gap of about €2bn which may have to be raised by selling the "crown jewels" of the company, RTE's business editor David Murphy told News at One today. 

The final figures are not yet known, but IL&P will have to raise much more money than it thought under the bank stress tests.

It will be given a deadline to raise that cash which may exceed €2bn, which would go to fill a hole in its banking division.

Even after the sell-offs, the company is likely to fall short of the required level of capital.

That is expected to result in the need for money from the State resulting in the company going into Government control.

None of these developments will affect depositors or policy holders.

Earlier today the company suspended its shares on stock markets for 48 hours due to a 45% slide in its share price yesterday.

In a statement to the stock exchange this morning, the company said it had noted the speculation about the potential need for more capital as a result of bank stress tests.

The company said it would not comment until the stress tests are published tomorrow.

The Department of Finance also said it would not comment ahead of the publication of the stress tests.

It said the actions of the Government and the Central Bank are to ensure that the banking system is functioning and that deposits covered by the Eligible Liabilities Guarantee continue to be covered.

Elsewhere, the organisation that represents insurance brokers has called for Irish Life to be split from Permanent TSB bank.

The Professional Insurance Brokers Association says it is essential Irish Life remains in private hands.