Austrian banking group Bawag said that it may seek to raise capital to help fund the almost €1.62 billion purchase of PTSB.
However, it highlighted in its latest quarterly earnings statement that this would be an “alternative option” as it focuses on storing up capital by limiting a dividend payout for the second half of this year to about €500 million and freeing up capital from what it has referred to as “credit protection solutions”.
The bank is planning to pay €481 million in dividends on last year’s earnings.
This is seen as referring to the bank’s reported plan to essentially ensure a portfolio of loans against loan losses through a so-called significant risk transfer (SRT) deal. An SRT would see groups of institutional investors take on part of the risk of losses on the loans in portfolios for an extended period, reducing the level of capital the bank needs to hold in reserve against the loans.
“Alternative options would be further dividend adjustments and/or a potential capital raise,” the bank said in an earning statements, published on Tuesday.
PTSB, which is 57.5 per cent owned by the State, revealed last week that it had agreed to sell itself to Bawag, having put itself up for sale last October.
“The proposed acquisition of PTSB would be transformative as we continue to build a pan-European and US banking group,” said Bawag chief executive Anas Abuzaakouk. “Upon completion, Bawag Group would exceed €100 billion in total assets, serve more than five million customers across seven countries, and offer a comprehensive suite of retail, SME, and corporate banking products.”