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Money Mentor Margaret Nolan says that the competition authority’s formal process to review the AIB bank and Ulster bank deal has commenced.
The Competition and Consumer Protection Commission (CCPC), the competition regulator in Ireland, which was established in 2014 has a broad mandate. It has statutory responsibility for enforcing competition and consumer protection law, while also promoting competition and consumer welfare.
The CCPC came into being from the amalgamation of the National Consumer Agency and the Competition Authority. Based on the fast pace of the banking consolidation taking place in Ireland currently, the CCPC will have plenty of regulatory approvals to process.
AIB bank and Ulster bank deal
AIB’s proposed acquisition of Ulster Bank’s €4.2bn of commercial loans has been formally notified to the CCPC, which will now commence its regulatory approval process.
This deal has been ongoing since early February when Ulster Bank’s owner NatWest and AIB announced the proposed sale, by confirming that both banks had signed a non-binding memorandum of understanding.
PTSB bank announced at the same time it was interested in Ulster bank’s retail lending business (mortgages and SME loans).
AIB’s agreement with Ulster bank is in relation to the €4.2bn portfolio of performing commercial lending, plus up to €2.8bn of undrawn exposures.
In June, AIB bank and NatWest signed a legally binding agreement for this commercial loan book, and this deal has now been notified to the CCPC to commence the regulatory approval process.
Approximately 280 employees, who are directly involved in the servicing of these Ulster bank commercial loans, will transfer to AIB under the Transfer of Undertakings legislation if this deal goes ahead.
What about Ulster bank’s tracker mortgage loans?
This deal does not include any reference to the sale of Ulster bank’s tracker mortgage loan book to AIB, which is also being discussed between the two lenders.
The regulatory process
Under the regulatory process, any third party with views on this deal can raise them with the CCPC up to 16 August. If there are issues to be addressed, the CCPC can open a second phase investigation (proceed to a full investigation).
Three retail banks may become a reality.
The CCPC, as the competition regulator in Ireland, is also considering Bank of Ireland’s planned takeover of KBC bank’s business here. If this, and the other bank deals being discussed (such as AIB and Ulster bank deal, the PTSB bank and Ulster bank deal in relation to €7.6bn of performing loans), all go ahead, the likelihood of three retail banks in the State instead of five may become a reality.
PTSB and Ulster Bank
The PTSB's proposed deal with Ulster Bank includes 25 Ulster bank branches and €7.6bn performing loans (€7bn relate to non-tracker mortgages, the remainder made up of micro SME loans and asset finance business). As part of this deal, NatWest will take a stake of up to 20% of PTSB bank.
Stockbroker approval
AIB bank has secured competition approval for its takeover of Goodbody Stockbrokers. Bank of Ireland’s planned purchase of Davy Stockbrokers for €440m, also requiring competition approval, is still in process.
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