AIB has entered into a binding agreement with NatWest Group plc and Ulster Bank Ireland for acquisition of a tracker and linked mortgage portfolio with an expected value of circa €5.7bn.

This agreement has been reached further to the exclusive discussions that were announced on 29 April 2022 following a period of due diligence on the portfolio.

The talks followed the Competition and Consumer Protection Commission clearing the deal on April 28.

AIB will acquire c.47,000 Ulster Bank customer loans for €5.4bn, equivalent to 95.2% of par value, payable in cash funded from its existing resources.

AIB said the exact consideration payable will depend on movements in the portfolio up to completion.

In Association with

AIB added that it intends to engage a third party service provider to administer the portfolio on its behalf. “This servicing arrangement will have no impact on customers who will retain their existing terms and conditions,” the bank stated.

Ulster Bank stated that impacted customers’ mortgage loans and their legal and regulatory protections will not change in any way as a consequence of the sale.

The bank also clarified that the AIB transaction does not include Offset mortgages.

“Customers do not need to take any action on the back of the announcement and we will be in contact with potentially impacted customers in the coming weeks and months,” Ulster Bank stated.

The average remaining term duration for the loans being sold is c.13 years. 90% of the mortgages relate to private dwelling homes and 10% relate to buy to let properties.  

Ulster Bank chief executive Jane Howard said: “The most important message today is to confirm to impacted Ulster Bank tracker mortgage customers that their tracker mortgage product and their legal and regulatory protections do not change as a consequence of this transaction.

“We want to reassure customers that they will continue to retain their tracker mortgage in line with their mortgage documentation. Following any relevant approvals, we will work closely with AIB to ensure that the transfer of the portfolio is as smooth as possible.”

The transaction remains subject to obtaining any necessary customary regulatory approvals, and AIB expects to acquire an economic interest in the mortgage portfolio in the second half of 2022, with formal completion expected in Q2 2023.

AIB chief executive Colin Hunt (pictured) commented: “We are delighted to have reached agreement with NatWest and Ulster Bank on another loan book acquisition, and look forward to welcoming these customers to AIB.

“This acquisition further adds to our growing balance sheet and progress towards our strategic targets. Our strong capital position enables us to invest in our business, pursue RoTE accretive inorganic opportunities and make distributions to shareholders.”