Permanent TSB has started early talks with potential investors and has received "very favourable" responses, its chief executive Jeremy Masding said today.

After failing European Central Bank stress tests last month, the bank said it was finalising plans to raise at least €125m of capital from private investors. 

"We've started the discussions with potential investors and the initial response to our story has been very favourable," Mr Masding told the Committee on Finance, Public Expenditure and Reform today.

"This is a very early stage in a long journey so I don't expect to be making any public pronouncements probably until the end of quarter one next year," he added.

Mr Masding said his job was to get the possible deal from the capital markets and he would bring any plan, which has to be in place by July 2015, to the MInister for Finance and minority shareholders for approval.

Mr Masding also told the committee today that the bank expects to be profitable by the end of 2016 or potentially earlier, raising a prior forecast to return to profitability across its businesses by 2017. 

"I would expect the bank to be profitable at the back end of 2016, potentially earlier if the economy keeps growing at the rate it is," the bank chief stated. 

He said the state-owned lender could also be profitable sooner due to provision writebacks, but that "sustainable profitability" would be reached by the end of 2016.