Bank of Ireland will acquire the performing loan assets and deposits of KBC Bank Ireland for a total consideration of around €5bn.
The deal comes as Belgium-based KBC Group winds down its operations in Ireland, where it has 12 hubs and 320,000 customers.
Bank of Ireland, the country’s largest bank, will acquire €8.8bn of performing mortgages, €0.1bn of performing commercial and consumer loans and c.€4.4bn of deposits.
A memorandum of understanding over the deal was announced in April, while a binding agreement, which is still subject to regulatory approval, was announced today.
KBC Bank Ireland chief executive Ales Blazek said customers did not need to take action at this point.
“KBC Bank Ireland remains committed to servicing customers of its retail banking and insurance products through its digital channels and hubs,” Blazek said.
“We will communicate to our customers well in advance of any actual steps that may be taken with respect to their products or if our customers need to take any action at any point.”
KBC Group chief executive Johan Thijs called the deal an “important step” in his group’s withdrawal from the Irish market, and expressed confidence that Bank of Ireland would provide a “good home” to KBC Bank Ireland.
In August, KBC Bank Ireland announced it would sell its non-performing mortgage loan portfolio of around €1.1bn to US-based investment manager CarVal Investors. Pepper Finance Corporation, which is regulated by the Central Bank of Ireland, was named portfolio manager.
Thijs has previously said the decision to leave Ireland, where it has built a digital-first retail bank with a strong liquidity and capital position was due to the “challenging operational context for European banks”.
In February, NatWest-owned Ulster Bank also said it would begin a phased withdrawal of all banking activity and associated services within the Republic of Ireland.
Bank of Ireland Group chief executive Francesca McDonagh said the loan book acquisition was a “positive development for our business and consistent with our growth strategy.”
The group will acquire the performing mortgages for 103.6% of par value.
It will also pick up a small portfolio of €0.3bn non-performing mortgages.
The acquisition is expected to bring in incremental net interest income of c.€160m in 2023, which will reduce over time as the portfolios redeem.
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