PERMANENT TSB IS to reveal the number of branches it is to shut as part of a wider restructuring plan within the next week.
Speaking to the Oireachtas Finance Committee this afternoon, chief executive Jeremy Masding said the group intends to reduce the number of branches down from its current 92 locations.
During his address, the CEO insisted that any changes will not “unduly impact” on customer service. A reorganisation of the head office and the reduction of operating expenses are also key components to the proposed restructuring plan, which was drafted to “secure the future of the bank”.
The progress made under the proposals will be reviewed by the Troika in early-October.
Masding, who took the top job at PTSB in February, said that the Troika “had made it very clear that time is of the essence and that they will be reviewing progress on this plan when we next meet them in October.”
The British banker told the committee that his objective at PTSB was to create a viable, customer focussed and competitive bank. He said the plan to rebuild the group would require the separation of a “new” PTSB from an Asset Management Unit where the bank’s uneconomic loans would be managed.
After learning about details in the bank’s submission to the Government and the regulator on Monday, the Irish Independent reported that PTSB is set to shut at least 25 branches.
Mortgage interest rates
Commenting on the group’s high-than-average mortgage rates, Masding said that with cuts of 85 basis points over the past eight weeks, the bank had “significantly improved” its comparative position. The recent drop in rates “ended its ‘outlier’ status in respect of variable rates, he added.
Although he did not rule out further rate cuts, he did say they would be dependent on the bank’s ability to reduce the funding costs it faced.
“The cost of deposits in this market is expensive,” he explained. “If it reduces, and I hope it does, I believe we’ll be able to reduce our variable rates further. That’s how a rational banking system works. We won’t proactively chase down mortgage rates.”
Masding said that Ireland faced an important choice in respect of banks which have been supported by the taxpayer – whether to “persist with an emasculated banking system which is forever reliant on taxpayer support, lives the lie of artificial pricing and which is incapable of normal business” or “to take the difficult decisions necessary to restore strength and vigour to our banks so that they can be weaned off taxpayer support and, ultimately, return to the normal business of banking; the raising of money from deposits at reasonable rates, supplemented by selective levels of wholesale funding, funds that are then lent to borrowers at reasonable rates.”
He also stressed to the committee the appreciation of the bank – and his own appreciation – for the support of the Irish Government during the financial crisis and emphasised the bank’s commitment to protecting the investment which the taxpayer has made in the bank.