The Competition and Consumer Protection Commission has cleared AIB’s acquisition of commercial loans from Ulster Bank Ireland.

In addition to the commercial loans, a number of Ulster Bank employees will  transfer to AIB.

Based on a review of the evidence available to it, the CCPC accepted the argument of the parties that Ulster Bank would cease to provide commercial loans to businesses in the Republic of Ireland with turnover greater than €2m, irrespective of whether or not the sale of its commercial loan portfolio to AIB proceeded.

The CCPC said it considered whether the proposed acquisition would cause a substantial lessening of competition, when compared to the alternative scenario of an exit of Ulster Bank by winding down its business lending or (in the case of commercial real estate loans) a sale of the loans to an alternative purchaser, and found that it would not. 

Ulster Bank’s exit from the market means that only two full service banks will remain in the state to serve the needs of businesses with turnover between €2m to €250m.

In Association with

The CCPC stated: "International evidence shows that higher concentration in banking services is likely to have a detrimental effect on competition, leading to poorer outcomes for business borrowers in terms of pricing, innovation and service.

“This is substantiated by some of the business customers contacted by the CCPC, who indicated that they had concerns with the exit of Ulster Bank from the state.

“While 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.”

The CCPC statement noted that that the retail banking review currently being conducted by the Department of Finance will consider the structure of the banking industry, competition in the market for banking services, and the availability of credit for SMEs. 

The watchdog declared: “The CCPC considers that its concerns regarding the competitive landscape of the Irish banking services market are highly relevant to all of these issues and will continue to work with all stakeholders to consider how to ensure the market is open and competitive to the benefit of everyone.”

Still under review by the CCPC is the proposed acquisition of other Ulster Bank assets by Permanent TSB. These relate to borrowing by SMEs with turnover less than €2m.

AIB Group clarified that for the c €3.7bn Ulster Bank performing corporate and commercial loans, it will commence the migration of loans on a phased basis over the coming months “to ensure optimised outcomes for the c. 5,000 impacted customers”.

AIB chief executive Colin Hunt commented: “Receipt of CCPC approval is another important milestone in AIB’s inorganic strategy and follows the successful integration of Goodbody last year. We look forward to working with our new customers and equally our new colleagues from Ulster Bank as they move to AIB Group. I would like to thank everyone who has worked on this landmark transaction.”

Separately, AIB stated that it has entered into exclusive discussions with NatWest Group for the acquisition of c.€6bn Ulster Bank performing tracker and linked mortgages.

“Any potential transaction remains subject to negotiations and agreement,” the bank said..