Irish Life Said to Weigh Sale of Life, Fund Management Units
By Joe Brennan - Mar 30, 2011 9:07 AM ET
Irish Life & Permanent Plc, the nation’s only government-guaranteed bank to avoid a bailout, is weighing a sale of its profitable life assurance and investment management units, three people with knowledge of the talks said.
The government is pushing for the sale of the divisions to reduce the amount of money it will need to inject into Irish Life’s unprofitable banking arm, said the people, who declined to be identified because a decision is yet to be made. They are worth 1.75 billion euros ($2.46 billion) in all, according to Eamonn Hughes, an analyst at Goodbody Stockbrokers in Dublin.
Irish Life today suspended trading in its shares until April 1, a day after the results of stress tests on the country’s lenders are revealed. The government may take a majority stake in the lender, the Irish Times said yesterday.
Gerry Hassett, chief executive officer of Irish Life & Permanent’s Irish Life Retail unit, said the parent will decide on the future ownership of his division. The company will do “whatever it can” to minimize any cost to the state of rescuing the banking arm, Hassett said in an interview with Dublin-based broadcaster RTE Radio today. If that means the life division has to be sold, “so be it,” he said, adding that a “range of outcomes” is being discussed.
Spokesmen for Irish Life, the Finance Ministry and central bank in Dublin all declined to comment.
Shares Tumble
Shares in Irish Life, which traces its roots back to 1884, when a precursor to its banking arm was formed, have more than halved in value since Ireland applied for an international bailout for its banks and agreed to carry out the stress tests.
The tests examine how banks would manage bad loans and losses from forced asset sales. The results will be published by the central bank at 4:30 p.m. tomorrow.
Irish Life may require more than 1 billion euros to allow its banking unit to operate without support from the company’s life and pension operations, Hughes said in a note to clients yesterday. The stress tests “may drive this base figure higher again,” he said.
To contact the reporter on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net;
To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net
