The transaction, if materialised, would KBC Group’s exit from Ireland. Credit: Dylan Gillis on Unsplash

KBC Bank Ireland has reached a memorandum of understanding (MOU) with Bank of Ireland for sale of all of its performing loan assets and liabilities to the latter.

The remaining non-performing mortgage loan portfolio of KBC Bank Ireland has been excluded from the MOU.

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KBC Group, a Belgian banking group, is currently reviewing its options to offload the NPL portfolio.

The transaction, if materialised, would KBC Group’s exit from Ireland.

The Belgian lender forayed into Ireland in 1978. It had $10bn in Irish loans, €5bn in deposits and a 12.6% mortgage market share at the end of last year.    

The move awaits further negotiation as well as agreement of final terms and binding documentation.

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It also awaits customary due diligence along with internal and external regulatory nod.

KBC Group CEO Johan Thijs said: “Given the challenging operational context for European banks and after careful consideration, we have reached an agreement with Bank of Ireland Group regarding the potential sale to Bank of Ireland Group of substantially all of the performing loan assets and liabilities of KBC Bank Ireland.

“Next to this MOU, KBC Bank Ireland’s remaining non-performing mortgage loan portfolio is currently being reviewed for potential divestment.”

KBC Bank Ireland also said that it will continue to provide its retail banking and insurance services via digital channels and hubs.

KBC Bank Ireland customers’ products or services will not be affected nor do they require to take action for this announcement, stated the bank.

Bank of Ireland group CEO Francesca McDonagh said: “This MOU complements our strategy to grow our business in Ireland, and supports the investments we are making in the transformation of our systems and digital banking services.”

Recently, NatWest too announced a phased withdrawal from the Irish market —where it owns Ulster Bank—after reporting a £351m annual loss in 2020.