Michael McGrath (Cork South Central, Fianna Fail)
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153. To ask the Minister for Finance if consideration has been given to merging Permanent TSB with another entity in the Irish banking sector; when he expects the future business model for Permanent TSB to be known; and if he will make a statement on the matter. [27130/14]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy will recall that a way forward was agreed with the Troika in April 2012 which envisaged it playing an important role in the future of Irish retail banking, being a more focused retail bank bringing an element of competition to the marketplace which has consolidated significantly since 2008.  In this regard Permanent TSB prepared a Restructuring Plan, which the Department of Finance submitted to the European Commission ("the Commission") in June 2012.  As requested by the Commission an updated version of the plan was submitted in August 2013 which is broadly in line with the June 2012 plan. 

While no plan has been approved, Permanent TSB has made significant progress in delivering key elements of the Restructuring Plan and the business is being managed structurally in the way envisaged in the plan. Permanent TSB continues to work to enhance the value of our investments through the continued delivery of the Restructuring Plan, which will, if delivered, provide the State with more optionality regarding the future structure of Permanent TSB. 

During 2013 Permanent TSB grew its presence and activity in the retail market in general and in the current account and deposit markets in particular, as well as in mortgages and term lending; and it launched several new products during the year.  Permanent TSB has also made progress in relation to managing its portfolio of mortgages in arrears. I am advised by Permanent TSB that during 2013 it made approximately 18,000 offers of long term sustainable solutions to customers in arrears or having difficulty with their mortgage repayments.

The strategy for Permanent TSB is to be an independent bank, competing within targeted segments of the retail banking market, and I will continue to support the board and management in the delivery of that strategy. While I am strongly supportive of Permanent TSB in the delivery of their strategy I cannot discount the possibility that a strategic transaction could arise opportunistically at any time involving Permanent TSB which could be in the best interests of the State.  As part of their day-to-day role my officials will consider all credible proposals and strategic options relating to our banking investments. 

As I have stated previously in addition to the many initiatives the Government is undertaking relating to non-bank credit I would like to see more competition in the domestic banking system to provide the lending required for our growing economy and that as part of that process I would welcome the participation of foreign banks in Ireland, possibly by way of  partnership with some of our domestic banks.