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European Union state aid regulators today approved Permanent TSB's restructuring plan after the bank pledged to raise net interest margins and sell low-yielding assets over the next three years.

The bank will also raise capital and cut costs as part of the plan, which the European Commission said was aimed at returning 99.2%-State owned bank to profit.

The restructuring plan includes a set of commitments during the restructuring period until the end of 2018, centred on the bank becoming a smaller, domestically-focused lender.

As part of the agreement, the bank will raise profitability by increasing its net interest margins, as well as disposing of low-yield assets.

As previously announced, Permanent TSB has committed to selling some loan portfolios, including its Capital Home Loans Ltd Mortgage Book, which is mainly buy-to-let loans in the UK, and its non-performing Irish Commercial Real Estate Lending portfolio.

It has also committed to reducing the value of its defaulted Irish tracker mortgages through a combination of measures, including cures and asset sales.

The bank has also pledged to raise new capital from private investors, with shareholders being told at its annual general meeting yesterday that 525m would be sought.

"PTSB will continue to de-leverage and reduce costs and will not be able to carry out acquisitions in this period. Moreover, PTSB will take certain actions to facilitate the market entry of competitors," the EU executive said in a statement.

Permanent TSB was required to submit a restructuring plan to European authorities after it received 2.7 billion of capital from the State during the financial crisis.

The European Commission sought the plan to ensure that this support was in line with EU state aid rules.

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EU Commission approves PTSB's restructuring plan