Competition watchdog clears sale of KBC loans to Bank of Ireland

Conditions of sale include making €1bn of funding available to non-bank lenders

Bank of Ireland has been cleared to acquire €9 billion worth of loans from KBC Bank Ireland by the competition watchdog, subject to certain conditions being met. This decision marks another step towards KBC's exit of the Irish market.

The agreement is subject to a number of binding conditions, including making €1 billion of funding available to non-bank lenders in the Irish mortgage market through the purchasing of securities issued by them. It must also provide €1 million in funding to companies involved in developing innovations relevant to the mortgage markets, and honour certain rates and discounts currently available to KBC customers, as well as offering variable rates equivalent to that of KBC migrated variable rate customers, as well as fixed rate options, to KBC mortgage customers on fixed rates on their first rollover post-migration.

After carrying out an in-depth assessment of the Bank of Ireland transaction, the Competition and Consumer Protection Commission (CCPC) said the acquisition of the loan portfolio would not substantially lessen competition in Ireland.

Under the deal, Bank of Ireland will acquire almost €9 billion of KBC’s performing loan assets and a small number of non-performing mortgages. It is also taking on €4.4 billion in deposits. However, KBC’s current account customers will have to make alternative banking arrangements.

Bank of Ireland welcomed the CCPC announcement, and said it would continue to work closely with KBC to transfer customers over.

“Bank of Ireland has been part of Ireland’s commercial, economic and social fabric for almost 240 years, and we look forward to providing an excellent long-term home for KBC Bank Ireland customers,” said Francesca McDonagh, group chief executive of Bank of Ireland. “We are committed to delivering a smooth and seamless migration for KBC customers, ensuring strong customer protections and financial stability within the Irish banking sector and broader economy.”

Dilosk, formerly ICS Mortgages, is one of the two recipients of €500 million in funding in the next three years. The company currently has about €1.4 billion of mortgages under management.

“This funding availability is a positive development for the Irish mortgage market which will support ICS Mortgages’ growth and ambitions to reach a 10 per cent market share over the next few years,” said chief executive Fergal McGrath.

“We also welcome the acknowledgment from the CCPC of the key role that non-bank lenders such as ICS Mortgages have now, and will provide in the medium term in promoting competition and providing an alternative choice to Irish consumers for their mortgage needs.”

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