AIB seeks competition approval for final Ulster Bank loan book deal

AIB has officially sought clearance from the Competition and Consumer Protection Commission (CCPC) for its acquisition of Ulster Bank’s performing tracker mortgage book.

he deal for the €5.7bn portfolio of loans, agreed on June 1, is the last in a series of transactions instigated by the impending departures of Ulster and KBC from the Irish market.

It follows the approval by the CCPC of AIB’s purchase of Ulster Bank’s €4.2bn corporate and commercial loans business in April, one of several big deals pulled off by AIB chief executive Colin Hunt in the last two years.

The mortgages, which are priced at 1pc above the ECB rate and were acquired at a small discount to face value, will add €90m to AIB’s income from next year, according to the bank.

AIB said it intends to engage a third-party service provider to administer the portfolio of 47,000 loans. The servicing arrangement will have no impact on customers, who will retain their existing terms and conditions, the bank said.

The CCPC has been reviewing several major banking sector transactions in the last year, as AIB, Bank of Ireland and Permanent TSB have all snapped up the best parts of the Ulster Bank and KBC.

In May the watchdog conditionally approved Bank of Ireland’s acquisition of KBC’s €9bn performing mortgage book after a lengthy review.

BOI will have to provide funding lines to non-bank mortgage providers as a competition remedy as part of the agreement. That deal is still awaiting approval by Finance Minister Paschal Donohoe.

Permanent TSB’s purchase of €7.6bn of Ulster Bank’s small business loans was cleared last month and is also on the minister’s desk.

The billions in asset transfers will leave Ireland with a heavily concentrated retail banking market of just three major players as the last two foreign banks vacate the market.

The CCPC said in April that international studies have shown that less banking competition leads to poorer outcomes for borrowers in terms of pricing, innovation and service”.

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