July 17, 2013 / 4:02 PM / 5 years ago

UPDATE 1-Ireland's Permanent TSB to submit restructuring plan by July 31

By Laura Noonan and Conor Humphries

DUBLIN, July 17 (Reuters) - Irish state-owned mortgage lender Permanent TSB will submit a revised restructuring plan to the Irish authorities by July 31 as the government bids to complete a banking overhaul, sources close to the matter said.

Permanent TSB, then known as Irish Life & Permanent, received 4 billion euros ($5.25 billion) of state aid in 2011 and submitted a business plan to the European Commission in June 2012.

The sale of its life insurance unit, for 1.3 billion euros, was completed on Tuesday.

A question mark hangs over the bank’s future because, unlike rescued Bank of Ireland and Allied Irish Banks , Permanent TSB was not granted the status of a “pillar bank” by the Irish government.

Its original business plan argued that a viable entity could be carved out of the bank despite the drag of 21.8 billion euros of loss-making tracker mortgages, which follow the ECB rate and are expensive to fund.

The tracker loans, issued during the Irish housing boom, make up two thirds of Permanent TSB’s total loan book.

Two sources told Reuters the bank, which employs 1,600 people, had been asked to submit fresh projections to Ireland’s Department of Finance by July 31.

The updated plan lays out options for separating the bank’s good and bad assets, and shows how its loans would perform if the economy worsened, one of the sources said. The bank declined to comment.

“Given the passage of time and the change in market circumstances over the past 12 months updated financial forecasts have been requested by DG COMP (Brussels’ state aid division) and will be supplied shortly,” a spokesman for the Department of Finance told Reuters. “This is not unusual.”

The spokesman added that the plan would be “broadly the same as that proposed in June 2012 and envisages the bank playing an important role in the future of Irish retail banking.” $1 = 0.7612 euros)

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