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AIB, Permanent TSB to take biggest hit from proposed tax change, broker says

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AIB, Permanent TSB to take biggest hit from proposed tax change, broker says

A plan by the Irish Oireachtas Public Accounts Committee to limit lenders' use of losses incurred during the financial crisis to offset future tax bills would hit majority state-owned banks Allied Irish Banks PLC and Permanent TSB Group Holdings PLC the most, The Irish Times reported, citing a note to clients from Goodbody Stockbrokers.

The committee aims to introduce a so-called sunset clause limiting the use of deferred tax assets, or DTAs, to a 10-year period, as it considers that the banking sector is now profitable and should be paying more taxes, the newspaper said, citing an earlier report from the Sunday Business Post.

AIB has €2.6 billion of DTAs, although they are valued by Goodbody at a little over half that amount on a current-value basis, The Irish Times noted. These account for 8% of the stockbroker's fair value on the lender, and analysts estimate that a 10-year clause would wipe 3% from its value.

Permanent TSB's DTAs of €350 million account for 13% of Goodbody's fair value for the bank, and analysts project a drop of 8% in value, with two-thirds of the DTAs to be used beyond the 10-year period, analysts said.

Goodbody said it estimates that Bank of Ireland will be able to use its €1.2 billion of DTAs within the 10-year window.