Acquirer unlikely to pay more than \u20ac1.1bn, according to Royal Bank of Canada (RBC)\n<\/p>\n
In a brutal assessment, they say the bank is unlikely to be attractive to an international bank, while a private equity buyer that would be prepared to do the \u201cheavy lifting\u201d of slashing headcount and shutting branches is far less likely to pay a premium given the limited synergy potential.<\/p>\n
\u201cWe understand Ireland’s attractiveness as a market with high relative concentration and growth. But we do not see the attractiveness of PTSB for an acquirer, and we would be surprised if anyone will pay more than \u20ac2 per share (\u20ac1.1bn) for the bank,” the RBC analysts wrote in a note. <\/p>\n
A price of \u20ac2 a share would be lower than where the stock traded (\u20ac2.35 each) before its board announced the launch of a formal sale process led by Goldman Sachs on October 30.<\/p>\n
The shares shot up after that announcement and have hovered around \u20ac3.20 each since then, in anticipation a buyer would pay a premium to buy the bank as a whole. <\/p>\n
RBC points to what they see as two big drags on the potential price. <\/p>\n
PTSB’s revenue is very dependent on net interest income in what is now a falling rate environment, and the bank is on course, they say, to have the worst cost-to-income ratio of any EU or UK bank by 2027.<\/p>\n
The analysis makes for grim reading for Finance Minister Paschal Donohoe.<\/p>\n
A price of \u20ac2 a share would value the State\u2019s majority stake at just \u20ac631m, well short of any prospect of breaking even on the remaining shortfall on the cost of rescuing the bank. <\/p>\n
Taxpayers have recouped around \u20ac2.8bn of the cost of the former Irish Life & Permanent (IL&P) since its rescue, including from the \u20ac1.3bn sale of Irish Life back in 2013. A sale at \u20ac2 a share, if the Government allowed that to happen, would crystalise a \u20ac530m cash loss on the bailout.<\/p>\n
The analysts highlight their view that PTSB is not attractive to buy for a cross-border bank, given its relative small size and what they see as a need for radical cost cutting that will inevitably be unpopular.<\/p>\n
\u201cIn order to generate meaningful cost synergies, we think any acquirer would have to significantly cut headcount and branches. Given PTSB’s largest shareholder is the Irish government (57pc), we do not see how the aforementioned will be politically palatable without onerous stipulations being attached to the deal,\u201d they said. <\/p>\n
While some buyer might see the chance to slash costs as an opportunity their ability to capitalise on that is limited unless they already have a bank in Ireland, the analysts think. <\/p>\n
\u201cPTSB’s cost problem could be presented as an opportunity with plenty of low-hanging fruit, but potential synergies will be significantly curtailed if this is not a domestic transaction.”<\/p>\n","protected":false},"excerpt":{"rendered":"Acquirer unlikely to pay more than \u20ac1.1bn, according to Royal Bank of Canada (RBC) In a brutal assessment,…\n","protected":false},"author":2,"featured_media":178677,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[73],"tags":[79,10891,18,19,17],"class_list":{"0":"post-178676","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-business","9":"tag-donal-odonovan","10":"tag-eire","11":"tag-ie","12":"tag-ireland"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ie\/115543120425005710","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/178676","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=178676"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/178676\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/178677"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=178676"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=178676"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=178676"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}