KBC Bank Ireland has welcomed Minister for Finance Paschal Donohoe's decision to approve the sale of substantially all of its performing loans and liabilities to Bank of Ireland ahead of its planned exit from the Irish banking market.

Government approval for the transaction comes 13 months after KBC and Bank of Ireland entered into a legally binding agreement regarding the purchase.

The Competition and Consumer Protection Commission (CCPC) in May authorised the deal on the condition that Bank of Ireland make €1bn in funding available to non-bank lenders to increase their funding capacity and reduce their cost of funding.

KBC said it expects the deal to close and for customer loans and liabilities to migrate to Bank of Ireland in the first quarter of 2023.

Johan Thijs, CEO of KBC Group, said: "Today’s approval represents an important step in KBC Group’s orderly and phased withdrawal from the Irish market. I am confident that together with Bank of Ireland Group, our customers will be provided with a good home, whilst continuing to enjoy the same legal and regulatory protections.

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"We remain committed to managing this process responsibly over the coming period. I also wish to explicitly thank the Irish management and colleagues for the enormous work and effort they have put in and are still doing in order to successfully complete the final steps of this process.”

KBC said it remains "determined" to protect the interests of customers to the greatest extent possible" as it winds down operations in Ireland.

The Belgian lender has written to customers to outline what to expect to happen in future and any actions they may have to take, and said it has agreed "strong redundancy terms" with employee representatives.

Some KBC staff will be eligible to transfer to Bank of Ireland, and the company said its approach to staff transfers and redundancies would be informed by Transfer of Undertakings (Protection of Employment) legislation.

Frank Jansen, CEO of KBC Bank Ireland, added: "We remain absolutely committed to meeting the responsibilities we have to our customers as we withdraw from the Irish market.

"Customer service will remain a key priority and we have written  to all of our customers to inform them about their specific products with the bank and associated actions they need to take.”

“I also wish to further acknowledge and thank all KBC employees who continue to provide excellent service and support to customers through what has been a very challenging time for them personally also.

"Employees continue to go above and beyond every day for colleagues and customers and we are extremely grateful for their continued commitment and support.” 

(Pic: Mark Stedman/Photocall Ireland)