Nearly 280 employees related to the servicing of the loan book are expected to join AIB as part of the deal. Credit: Gerd Altmann from Pixabay

Allied Irish Banks (AIB) has signed a binding agreement with Ulster Bank to acquire the latter’s €4.2bn of its performing corporate and commercial loan book.

The move follows a period of due diligence on the loan book.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

The consideration paid for the loan book is €4.1bn. AIB will pay for the deal in cash using its existing resources.

The deal awaits regulatory nod, after which AIB will transfer the portfolio in a phased manner over 12-18 months.

Nearly 280 employees related to the servicing of the loan book are expected to join AIB as part of the deal.

The exact number of employees transferred will be confirmed once the transaction is finalised.

AIB CEO Colin Hunt called the deal a ‘landmark acquisition’.

“AIB’s landmark acquisition of Ulster Bank’s €4.2 billion corporate and commercial loan book will further underpin the bank’s ambitious growth plans and position us to support the business community and Ireland’s economic recovery as we emerge from the pandemic,” he said.

AIB expects the deal to add to its earnings in 2023 and offer net interest income of €100m per year. It also expects the acquisition to increase operational costs of €30m annually.

The transfer will not impact the legal and regulatory protections of affected customers, stated Ulster Bank.

Ulster Bank CEO Jane Howard said: “Talks continue with Permanent TSB Group Holdings plc among other strategic banking counterparties on other elements of the phased withdrawal.

“I remain committed to managing our withdrawal carefully and responsibly over time, to deliver constructive solutions for our customers and their banking services within the Republic of Ireland.”

The decision for Ulster Bank’s phased withdrawal from Ireland was announced in February this year. The decision was made after a strategic review by its parent NatWest Group.

Also, a non-binding memorandum of understanding (MoU) with AIB was reached for the sale of performing commercial loans.

Meanwhile this April, KBC Bank Ireland reached a MoU with Bank of Ireland for sale of all of its performing loan assets and liabilities to the latter.