Ireland's PTSB says early NatWest talks 'encouraging'

By Padraic Halpin

DUBLIN (Reuters) - Ireland's Permanent TSB has had encouraging talks with NatWest to buy some of its Irish assets, PTSB's chief executive said on Wednesday after the mortgage lender reported a 2020 loss before tax of 166 million euros ($201 million).

PTSB said last month it was in early talks with NatWest to purchase mortgage and small- and medium-size business loans, branches and customer deposits, as the British lender winds down its Ulster Bank business in the Irish Republic.

The 75% state-owned PTSB would become the clear third-largest bank in Ireland if it concludes the deal, offering greater competition to the country's two dominant lenders, Allied Irish Banks and Bank of Ireland.

PTSB is in talks to acquire a "significant majority" of Ulster's 14 billion euro mortgage book, around 700 million euros of SME loans and some of its 88 branches, a source familiar with the process told Reuters last month.

That would almost double PTSB's mortgage loan book and transform its nascent SME business.

"I'm encouraged by the engagement so far and it does bode well for the coming months," CEO Eamonn Crowley told a news briefing on Wednesday, saying he has had a number of meetings with his counterpart at Ulster Bank since its decision to leave.

Crowley said the shape of a deal could take weeks or months to agree and that if the bank receives the support of shareholders, a legal agreement could be in place by the end of the year.

PTSB set aside 155 million euros last year to "prudently" cover likely loan losses arising from COVID-19 lockdowns, although a strong second half limited a year-on-year drop in new lending to 15% and not the 40-50% it feared last May.

While strong mortgage lending so far in 2021 followed a big jump in applications from July to December, the bank cautioned that the outlook remained uncertain.

Its fully loaded core Tier 1 capital ratio stood at 14.6% at the end of last year.

($1 = 0.8270 euros)

(Reporting by Padraic Halpin; editing by Jason Neely and Bernadette Baum)