Global Trade

Bank of Ireland acquires KBC’s Irish assets in a 5-billion-euro transaction.

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Bank of Ireland agreed on Friday to buy “virtually all” of KBC’s Irish performing assets for 5 billion euros, confirming that the Belgian financial major would become the latest lender to exit the declining Irish market.

In April, the two banks stated that they were in talks regarding a merger, only weeks after NatWest began winding down its Ulster Bank operations in the Irish Republic.

As a result of the exits, Ireland now has only three retail banks. Bank of Ireland, the country’s largest bank by assets, said it will acquire 8.8 billion euros of performing mortgages, 100 million euros of performing commercial and consumer loans, and 4.4 billion euros of deposits.

The sale would also include the acquisition of a portfolio of roughly 300 million euros in non-performing mortgages, according to a joint statement from the two banks. “Today’s agreement with Bank of Ireland Group regarding the sale … of substantially all of the performing loan assets and deposits of KBC Bank Ireland … represents an important step in KBC Group (OTC:KBCSY)’s withdrawal from the Irish market,” KBC Group Chief Executive Johan Thijs said in a statement.

The deal is still subject to regulatory approval. Exits by KBC and NatWest appear to be strengthening the grip of Bank of Ireland and primary rival Allied Irish Banks on their home market. AIB purchased 4.2 billion euros in corporate and commercial loans from NatWest and is in discussions to add home loans.

The smaller permanent TSB has also taken advantage, purchasing 25 of Ulster Bank’s 88 branches as well as 7.6 billion euros in gross performing loans from the previous number three lender.

Bank of Ireland stated that it was acquiring the performing mortgages for 103.6 percent of their par value and that the transaction would result in an additional net interest revenue of roughly 160 million euros in 2023.

According to the statement, the exact size of the portfolio and consideration due may vary between now and completion based on normal business flows, although this is not expected to be considerably different.

Story by : Norvisi Mawunyegah