Watchdog examining PTSB’s Ulster Bank loans buy plan

Heightened assessment in line with level applied to Ulster Bank and KBC Irish exits

The State's competition watchdog has launched an in-depth assessment of Permanent TSB's (PTSB) plan to buy €6.8 billion of Ulster Bank loans, in line with the heightened scrutiny it is applying to deals emerging from the exits of the UK-owned bank and rival KBC Bank Ireland from the Irish market.

The Competition and Consumer Protection Commission (CCPC) said in a statement on its website on Tuesday afternoon that it had decided to carry out a so-called phase-two investigation of the proposed deal, which would grow PTSB’s loan book by more than 40 per cent.

The agreed transaction also involves PTSB taking over Ulster Bank's 88 branches and NatWest, Ulster Bank's parent, accepting a 16.7 per cent stake in the State-controlled lender as part payment.

“Following an extended phase-one investigation, the CCPC has determined that a full investigation is required in order to establish if the proposed transaction could lead to a substantial lessening of competition in the State,” the authority said, as it called on interested parties to make submissions by email by May 30th.

The commission signalled last year that it would be applying a robust test to plans by the three remaining retail banks in the State to carve up the loan books of Ulster Bank and KBC Bank Ireland, as the two overseas-owned lenders withdraw from the market.

The departing lenders accounted for about 25 per cent of mortgage lending in 2020, while Ulster Bank is estimated to have held a steady share, of about 20 per cent, of the SME market in recent years.

AIB plan

Almost two weeks ago, the competition commission cleared AIB’s plans to acquire €3.7 billion of Ulster Bank performing corporate and commercial loans, after a similar phase-two investigation, even as it highlighted that consolation of the banking sector could hurt consumers.

“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,” it said at the time.

The CCPC also warned in February of its concerns that Bank of Ireland’s plan to purchase €9 billion of performing loans from KBC Bank Ireland, as the Belgian-owned lender also retreats from the market, “is likely to give rise to a substantial lessening of competition in relation to the market for the provision of mortgages in the State”. Its in-depth assessment of that deal is ongoing.

It is also likely that AIB’s plans to buy about €6 billion of tracker mortgages from Ulster Bank, subject to the signing of a binding agreement in the coming months, will face similar scrutiny.