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AIB cleared to acquire €4.2 billion Ulster Bank loan porfolio

Ulster Bank is set to withdraw all of its banking services from Ireland.

Image: Alamy Stock Photo

AIB HAS BEEN cleared to acquire Ulster Bank’s commercial loans portfolio worth €4.2 billion as the latter bank pulls out of Ireland.

Ulster Bank is set to withdraw all of its banking services from Ireland, which – along with the planned departure of KBC Bank – is creating gaps in the financial landscape.

The Competition and Consumer Protection Commission (CCPC) has cleared the proposed aquisition of Ulster Bank’s loans to businesses by AIB.

Additionally, some Ulster Bank employees will transfer to AIB.

AIB agreed the €4.2 billion deal with Ulster Bank to take over its performing corporate and commercial loans last June, a few months after its parent company announced plans to wind down Ulster Bank’s operations in Ireland. 

After reviewing the available evidence, the CCPC has accepted an argument by both banks that Ulster Bank will cease providing the relevent loans to businesses in Ireland regardless of whether the sale to AIB proceeds.

In a statement, the CCPC said that international evidence shows higher concentration in banking services is likely to have a detrimental effect on competition, which in turn leads to poorer pricing, innovation and service for business borrowers.

“This is substantiated by some of the business customers contacted by the CCPC, who indicated that they had concerns with the exit of Ulster Bank from the State,” the commission said.

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It said that “while the CCPC does not have a role in approving or reversing the decision of a company to exit the State, it does have a duty to highlight competition issues which arise as a result of the exit and which are likely to harm business customers and the wider Irish economy”.

“The CCPC notes that the retail banking review currently being conducted by the Department of Finance will consider (amongst other things) the structure of the banking industry, competition in the market for banking services, and the availability of credit for SMEs.  

“The CCPC considers that its concerns regarding the competitive landscape of the Irish banking services market are highly relevant to all of these issues and will continue to work with all stakeholders to consider how to ensure the market is open and competitive to the benefit of everyone.” 

About the author:

Lauren Boland

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