Bank loan

Full investigation announced for AIB-Ulster Bank loan deal

The Competition and Consumer Protection Commission (CCPC) will conduct a full Phase 2 investigation into whether AIB’s planned €4.2 billion deal to buy the company’s corporate and corporate loan book ‘Ulster Bank could significantly reduce competition.

AIB announced an agreement with Ulster Bank and its parent company NatWest Holdings for the loan portfolio in June, following the announcement a few months earlier that Ulster Bank would withdraw from the Irish market. Under the terms of the proposed agreement, approximately 280 Ulster Bank employees involved in servicing the loan portfolio would transfer to AIB.

CCPC’s announcement comes following a preliminary investigation by the regulator, which also launched a full phase two investigation in October into Bank of Ireland’s proposed purchase of the €9 billion in performing loans of KBC Bank Ireland focused on mortgage loans.

AIB is to acquire the Ulster Bank portfolio for the equivalent of 97.63% of face value, payable in cash from its existing resources. The exact size of the Portfolio and the consideration to be paid will depend on the movements of the Portfolio to completion.

AIB is also known to be in talks to acquire Ulster Bank’s €6.5 billion follow-on mortgages, where customers’ borrowing costs are linked to the European Central Bank’s main rate.