Bawag Group AG will slash investor payouts and use significant risk transfers to finance its €1.62 billion ($1.9 billion) acquisition of Ireland's third-largest lender, Permanent TSB. The Vienna-based bank will forgo its first-half dividend, saving approximately €500 million, and will rely on surplus capital and balance-sheet optimization to cover the remaining costs.

Chief Financial Officer Enver Sirucic told reporters that Bawag may exceed its regular 55% dividend payout target in the second half to compensate investors. The deal represents Bawag's largest-ever acquisition and will expand its presence in the Irish market while allowing the government to exit its final banking stake from the global financial crisis bailouts.

The acquisition will likely compress Bawag's common equity tier 1 ratio to its 12.5% management target, potentially forcing further dividend adjustments or fresh capital raises if market conditions deteriorate. The bank confirmed its €960 million net income target for 2025 despite recording €232 million in first-quarter earnings, which fell short of analyst expectations.