The diverging share price movements of PTSB and Bawag on Tuesday, as the Austrian bank agreed to buy the 57.5 per cent State-owned lender for almost €1.62 billion, told its own story.

Bawag shares soared as much as 8 per cent to hit a record high, valuing the group at €11.7 billion, as investors cheered the most significant of 15 bank or loan portfolio deals it has struck since 2015.

PTSB’s shares, however, slid as much as 5 per cent to €2.86 – below the agreed €2.97 a share that Bawag has agreed to pay for the bank, and well off a peak of €3.28 early last month as investors placed bets on how much the bank’s sale could achieve. The shares were changing hands at €2.35 last October, before PTSB was put on the market.

[ Bawag insists it sees ‘value in PTSB branches’ after agreeing €1.62bn dealOpens in new window ]

“The reason why the share price is trading so far below the 297-cent agreed cash offer is, I suspect, partly due to some concerns in the market that it might not achieve the requisite shareholder support,” said John Cronin, managing director of Seapoint Insights, an independent research consultancy focusing on financial services.

The takeover will require support from at least 75 per cent of shareholders that participate in an extraordinary general meeting planned for the summer. The Government has already committed to using its 57.5 per cent stake to back the deal. While Bawag chief executive Anas Abuzaakouk said on a call with analysts the risk of the deal not being approved “is limited”, it won’t stop speculation – and potential share price volatility – in the meantime.

The stock price decline likely reflects some shareholders deciding to take money off the table now, rather than wait for the transaction to complete in late 2026 or early 2027. The calculation is that they could make more by investing elsewhere in the meantime.

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Bawag told its investors it expects the planned Irish purchase to boost earnings per share by more than 20 per cent after three years.

However, an accounting manoeuvre is on track to deliver a sizeable gain – of close to €400 million – on day one of the deal going through. This immediate profit, also known as badwill or negative goodwill, is created when a business is acquired at a discount to its inherent value.

The €1.62 billion value of the Bawag deal is at a discount to PTSB’s reported end-2025 net assets, of just under €2.02 billion.

PTSB itself used this accounting move to good effect when it acquired a portfolio of loans from Ulster Bank in 2023 – generating a €362 million gain and avoiding having to go cap in hand to shareholders for capital to help seal the deal.

However, Bawag chief financial officer Enver Siručić told analysts on Tuesday afternoon that the group would likely reinvest whatever badwill gain is created from the deal into PTSB.

“Bawag intends to invest meaningfully in PTSB to strengthen its competitiveness and sustainability within the Irish market, drawing on Bawag’s extensive experience in building and operating banking franchises across European markets,” said the Austrian bank and PTSB in a joint statement.

“As part of this, Bawag intends to carry out a detailed review in order to determine how best to combine the operations of Bawag and PTSB, identify areas for operational efficiency and synergies, leveraging best practices across the group.”

The hope is that the deal with a bank nearly 2½ times the size of PTSB’s €30.4 billion balance sheet will finally deliver a long-elusive third force in Irish banking.