Pearse Doherty (Donegal, Sinn Fein)
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131. To ask the Minister for Finance the options he is considering regarding his shares in Permanent TSB and the overall strategy for the bank; and if he will make a statement on the matter. [16845/16]

Michael Noonan (Limerick City, Fine Gael)
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Our strategy envisages Permanent TSB ("PTSB") playing an important role in the future of Irish retail banking as a retail bank bringing competition to the marketplace which has consolidated significantly since 2008.  PTSB is an important bank in a highly concentrated Irish market lending approximately €460 million in 2015. 

PTSB has fundamentally de-risked its balance sheet under the intensive oversight of various authorities since 2011 through deleverage, improved funding profile and increased capital levels (fully loaded CET1 of 15.4% at Q1, 2016). It has made positive progress on arrears reductions, with great than 90 day arrears in Homeloans c. 46% below peak levels in 2013.  PTSB returned to underlying profitability in 2015 for the first time since 2007 and it announced that it was profitable and capital generative in Q1, 2016 (€39m Profit Before Tax). 

Notwithstanding the positive progress made PTSB in many areas it's share price has fallen c 57% to date in 2016. The share price has been under pressure for a myriad of reasons including, but not limited to, the lower interest rate environment, the delayed disposal of CHL due to the UK referendum, increasing regulatory costs, the Central Bank tracker mortgage review, extension of the Bank Levy and higher provisions and lower growth in new lending than the market anticipated. I have also been informed that some investors are concerned about the policy that might be pursued by the new Government in relation to banking and the attitude of the Oireachtas to issues around mortgage interest rates. Equity research analysts covering PTSB have written about this topic in detail recently.

I am of the view that the best way to protect the value of the State's shareholding is to ensure PTSB continues the progress it has made with a view to reaching sustainable operating profitability and an adequate Return on Equity (ROE) as soon as possible while striving to meet the terms of the European Commission restructuring plan. 

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 PTSB which could be in the best interests of the State. As part of their day-to-day role officials in the Shareholding Management Unit will consider all credible proposals and develop strategic options relating to our banking investments and will also consider from time to time whether the sale of shares by way of placing would be beneficial for the State. Having said that I have no current plans to sell shares in PTSB, notwithstanding the flexibility to do so within the Programme for Government.

As I have stated previously I would like to see more competition in the domestic banking system to provide the lending required for our growing economy and this could be achieved through new entrants or the continued growth of our domestic banks.