Banking and finance buyout firm
J.C. Flowers will make a joint bid with private equity firm
The Irish government is selling the cash-rich life insurance arm, with an embedded value of around 1.6 billion euros to help fill a capital shortfall near €4 billion ($5.7 billion) in Irish Life and Permanent. It has injected €2.7 billion in state funds into since the company’s effective nationalization.
A spokesman for Irish Life said it would not comment on the sale. J.C. Flowers declined to comment.
In a related development, Irish Life & Permanent’s banking unit has agreed a deal to acquire the €650 million-plus Irish deposit book of UK lender Northern Rock as it seeks to improve its stretched funding position and ensure a standalone future for the bank.
The Northern Rock deal comes six months after IL&P’s bank, Permanent tsb, acquired some €3.6 billion in deposits from Irish Nationwide Building Society in a bid to lower its loan-to-deposit ratio, which is the highest in the industry.
Irish Life & Permanent’s banking arm is on track to turn a profit by 2014 according to a restructuring plan sent to the European Commission, the Irish Independent reported, quoting unnamed sources.
(Conor Humphries is a Reuters correspondent in Dublin; additional reporting by Carmel Crimmins and Padraic Halpin.)