AIB has formally sought approval from the Competition and Consumer Protection Commission (CCPC) to acquire Ulster Bank’s performance tracker mortgage book.
The €5.7 billion loan portfolio deal agreed on June 1 is the last in a series of deals triggered by the imminent exit of Ulster and KBC from the Irish market.
This follows the CCPC’s approval in April of AIB’s acquisition of Ulster Bank’s €4.2 billion corporate and commercial lending business, which AIB’s chief executive Colin Hunt has been doing for the past two years. It’s one of the few big deals we’ve made to.
The mortgage, priced at 1 percent above the ECB rate and obtained at a slight discount to par, will add €90 million to AIB’s income starting next year, according to the bank.
AIB said it will engage a third-party service provider to manage its portfolio of 47,000 loans. The service arrangement will not affect customers who retain existing terms and conditions, the bank said.
CCPC has been considering several major banking sector deals over the last year, as AIB, Bank of Ireland and Permanent TSB all acquired the best of Ulster Bank and KBC.
In May, Watchdog conditionally approved the Bank of Ireland’s acquisition of KBC’s €9 billion prime mortgage loan after a lengthy review process.
As part of the agreement, the BOI is required to provide a line of credit to non-bank mortgage providers as a competitive remedy. The deal is pending approval by Finance Minister Pascal Donohoe.
The permanent TSB’s purchase of €7.6bn of Ulster Bank’s SME loan was cleared last month and is also on the minister’s desk.
With the last two foreign banks exiting the market, billions of dollars in asset transfers will converge the Irish retail banking market to just three major players.
The CCPC said in April that international research showed that less competition among banks hurt borrower outcomes in terms of pricing, innovation and services.