Permanent TSB Group Holdings is considering raising as much as €400m in a share sale, according to a person with knowledge of the matter.

This is more than double the amount signalled by the lender last month, a report from the financial news agency Bloomberg says.

Permanent TSB's chief executive Jeremy Masding said last month that the bank aimed to raise €100-150m to shore up its capital, and that it had drawn  “real interest” from potential investors in the UK and US 

Permanent TSB was the only Irish bank to fail the European Central Bank’s stress test in October. 

Raising more equity would improve the quality and level of the bank’s reserves beyond what regulators are demanding. 

Officials from Permanent TSB, the Department of Finance and the Central Bank all declined to comment, Bloomberg said. 

Permanent TSB hired Deutsche Bank and Davy in October to assess market demand for a share sale. 

The lender has said it has already covered more than 80% of a €855m capital hole found in the tests with €400m of state-owned contingent convertible bonds and by shrinking its balance sheet this year. 

ECB supervisors last week endorsed the capital-raising plans of the 13 euro-area banks, including Permanent TSB, that failed the stress tests and still had gaps after measures taken this year were accounted for. 

The banks have up to nine months to implement the capital plans.

Separately, the High Court yesterday rejected a case by a group of minority Permanent TSB shareholders seeking to prevent the government selling shares in the lender. 

The group, led by investor Piotr Skoczylas, wanted an injunction pending a Court of Justice of the European Union ruling on the Government’s move in 2011 to inject €2.7 billion into the company and seize control of it.

Permanent TSB "is clearly not out of the woods yet and, as a regulatory matter, requires further recapitalisation," Judge Iseult O’Malley said in court in Dublin yesterday. 

Preventing it from raising money "carries obvious risks to the commercial wellbeing of the company and, potentially, to the state," the Judge added.