UPDATE 2-Ireland’s EBS eyes private, public capital sources

* Posts 2009 post-tax loss of 79 mln euros

* Private/state investment could fill 875 mln capital hole

* Analysts sceptical private investor return
(Adds analyst comment)

By Padraic Halpin

DUBLIN, April 29 (BestGrowthStock) – Ireland’s EBS Building Society
[EBSBS.UL] remains in talks on a possible private equity
investment and could also call on promised state help after
posting a loss for 2009 on the back of heavy impairment

EBS said it might be able to obtain “hundreds of millions”
of euros from private equity sources towards the extra 875
million it needs to satisfy new regulatory standards but must
first await European Union verdict on its restructuring plans.

“Our primary objective is to stabilise EBS and that could
happen through public, through private or through a combination
of public and private (sources),” EBS Chief Executive Fergus
Murphy told a news conference.

“That model will be ultimately tested in Europe and Europe
(the European Commission) has a huge say,” Murphy added.

EBS Finance Director Emer Finnan said the government would
most likely inject all 875 million euros if the EU has not made
a decision by the regulator’s end-of-year deadline with any
private equity investment then used to repay the state.

Murphy said the group of international investors, led by
Cardinal Asset Management, would look to up EBS’s profitability
above a previous peak of 57 million euros but analysts were
sceptical on the potential return private investors would see.

“I’m not convinced by it. If they’re putting in hundreds of
millions and so are the government, how do private equity
extract their gain out of something they don’t fully control,”
said Stephen Lyons, an analyst at Davy Stockbrokers.

“The only way it could potentially make sense is if the
government gave assurances to improve the deal, but their hands
are tied by the European Commission as it needs to be a
market-based transaction.”


EBS has examined the option of taking over assets remaining
in fellow building society Irish Nationwide [IRNBS.UL] after
both transfer loans to the National Asset Management Agency
(NAMA), Ireland’s “bad bank” scheme.

A potential tie-up between the two building societies was
earlier expected to form the basis of a “third force” in Irish
banking to compete with top banks Allied Irish Banks (ALBK.I: )
and Bank of Ireland (BKIR.I: ).

However, talks with Irish Nationwide, which will retain
only a fraction of its loan book after the sales to NAMA, have
been on hold for about a month pending an EU decision on their
respective restructuring plans, which EBS plans to submit by
the end of June.

EBS said on Thursday it had a 2009 post tax loss of 79
million euros ($105 million) after taking on impairment charges
of 195 million on loans. Approximately 83 million euros of the
impairment charge related to assets transferring to NAMA.

Investing Basics

($1=.7508 Euro)
(Additional reporting by Marie Louise-Gumuchian; editing by
Andras Gergely, Jon Loades-Carter and Matthew Lewis)

UPDATE 2-Ireland’s EBS eyes private, public capital sources