what have you based your calculations on to arrive at 1-2%? If they are having to pay 4.10% for 1 year money - why would they lend it at 3.50%? All that will do is increase operating losses and require more capital to be raised from the state.
As for saying PTSB can raise money from ECB at 1.50% - base rate, that's a limited resource. They can only borrow money to the extent that they have security in the form of funding. For every €70 of cash borrowed, they have to provide about €100 of mortgages (what is known as a haircut). So they other €30 needs to be funded from other sources such as the deposit book mentioned above. They also under the Pillar 2 regime set out by the Regulator, need to increase their loan to deposit ratio - again at a cost.