By Padraic Halpin
DUBLIN (Reuters) - Ireland's permanent tsb (PTSB) (I:IPM) expects to be profitable by the end of 2016, earlier than expected, and has held favourable early talks to raise private capital, its chief executive said on Wednesday.
The 99.2 percent state-owned bank was the only Irish lender to fail last month's European bank stress tests and is seeking to raise at least 100 million euros (78.78 million) to fill the portion of the capital shortfall it cannot fund itself.
The bank, one of only a few euro zone banks seeking outside investment following the stress tests which left a relatively modest 10 billion euros to be raised across the currency bloc, met investors in London, New York and Boston over the last week.
"The initial response to our story has been very favourable," Chief Executive Jeremy Masding told reporters ahead of an appearance before a parliamentary committee.
"Really it was about trying to garner some interest and introducing permanent tsb to the capital markets. I don't expect to be making any public pronouncements (on a proposed deal) probably until the end of quarter one next year."
Masding said deal structures, pricing and levels of shareholding were not discussed at the meetings, nor had Dublin's finance department placed any restrictions on him regarding how the state may be diluted in any deal.
PTSB, the smallest and only loss-making lender of Ireland's three domestically owned banks, now expects to be profitable "at the back end" of 2016 or potentially earlier, improving a prior forecast to return to profitability across the group in 2017.
Masding said it could be profitable even sooner depending on its ability to write back provisions on bad loans and that its updated EU restructuring plan would be ready for submission in the next couple of weeks.
On the much discussed proposed central bank restrictions on how much banks can lend to home buyers, Masding echoed comments from Allied Irish Banks' CEO on Tuesday that the rules should be moderated and introduced more gradually.
The bank's head of lending Ger Mitchell said demand for mortgage finance would be dampened in the near term if the rules are introduced as currently proposed.
(Editing by David Evans and David Holmes)