Permanent TSB shares jump as Cerberus set to win UK loanbook

Shares in Permanent TSB  jumped in early trading on Wednesday as it emerged the lender is in advanced talks to sell its remaining £2.5 billion (€2.8 billion) of UK buy-to-let loans.

US private-equity firm Cerberus has been selected as preferred bidder for the Capital Home Loans mortgage portfolio, according to sources, confirming a Reuters report.

Shares in PTSB soared 4.5 per cent to €2.30, their highest level since May. Cerberus bought the other half of CHL’s loans last year.

A spokesman for PTSB declined to comment.

Outperform rating

The development comes days after stockbroker Davy upgraded its rating on PTSB shares to outperform, saying it believed the bank could sell the remaining UK loans within a year, having previously pencilled in a deal by mid-2018.
The more optimistic view was a result of a surprise recovery in residential mortgage-backed securities (RMBS) market, which the likely buyer would likely use to fund the such a portfolio. Last week, Cerberus announced an RMBS sale directly backed by some of the CHL loans it had bought last year.

The bank had agreed with competition authorities in Brussels, following its State bailout, to sell off the remaining loans in the portfolio by the end of June. However, the UK’s decision to hold a referendum on its European Union membership and the subsequentvote to quit the EU cast doubt over when the sale might happen.

The current agreement with the European Commission is that PTSB does not have to sell at any more than a 10 per cent discount to the UK loan book’s value.

Cerberus has been among the most active buyers of loans from Irish banks and the National Asset Management Agency in recent years, most notably its controversial acquisition of Nama's Northern Ireland portfolio, Project Eagle, at a discounted price of about ¤1.6 billion. The transaction is subject to a number of investigations, mainly around how €7 million of fees linked to the deal ended up in an Isle of Man bank account belonging toa Belfast lawyer.
All parties have consistently denied any wrongdoing in relation to the deal.