Permanent TSB's chief executive Jeremy Masding rarely misses an opportunity to highlight how rising regulatory costs are frustrating his efforts to build a viable bank.
But the mounting cost of bank’s own regulatory transgressions haven’t helped either.
PTSB, which is 75 per cent State owned, saw its banking levy and regulatory charges rise to €61 million – or 13 per cent of total operating income – last year from €37 million in 2015 and are forecast to come in at about €55 million for 2017.
It’s a cost that Masding has repeatedly highlighted as “disproportionate”, saying earlier this year that “we hope that our business model – a simple, well-managed Irish retail and SME bank – will be rewarded over time by the regulator for its risk profile”.
The European Central Bank, which assumed responsibility for supervising euro zone banks in late 2014, had a different view on Monday when it announced it had fined PTSB €2.5 million for liquidity rules infractions. While the breaches are technical in nature, liquidity ratio rules – which govern how much cash or other liquid assets a bank can draw on to meet obligations in times of stress – are there for a reason.
PTSB carries the ignominy of being the first lender across the euro zone, to receive a fine from the ECB’s banking supervision arm. The fact that the bank had actually held its hand up, rather than wait to be caught, didn’t count for much.
Overcharging
Last November, PTSB was landed with a €4.5 million bill from regulators in Dublin in relation to the lender's former subprime unit, Springboard Mortgages, overcharging tracker mortgage customers over seven years to July 2015. Springboard was sold to Mars Capital, an affiliate of US investment group Oaktree in 2014.
Separately, PTSB is one of two lenders participating in an industry-wide tracker mortgage probe that are known to be facing enforcement procedures from the Central Bank on the matter. The other is Ulster Bank.
PTSB has set aside as much as €145 million in recent years to cover redress, legal and compliance issues, largely related to tracker mortgage issues.
All in all, it’s difficult to bemoan the cost of regulation when the bank is still paying up for legacy issues and more recent infringements.
