The Competition and Consumer Protection Commission (CCPC) has cleared Bank of Ireland’s acquisition of KBC Bank Ireland’s mortgage book.
The watchdog said its investigation into the deal identified “significant competition concerns”, in particular the strength of competition that non-bank lenders will provide in the medium term.
The CCPC’s solution is to compel Bank of Ireland to make available €1 billion in funding to certain non-bank lenders through the purchasing of securities issued by them, so as to increase their funding capacity and reduce their cost of funding.
In addition, Bank of Ireland has undertaken to assist innovation in the Irish mortgage market by providing €1m in funding to companies who develop innovations for the provision of mortgages.
The bank has also committed to honour the fixed rate terms enjoyed by KBC borrowers, and honouring the 0.2% mortgage discount rate that KBC current account customers enjoy.
In Association with
Bank of Ireland has also agreed to offer the variable rate equivalent to that of KBC migrated variable rate customers, as well as BOI fixed rate options, to fixed rate KBC mortgage customers on their first roll-over post-migration.
In a statement, Bank of Ireland said these remedies will not materially impact the overall financial benefits of the acquisition.
Francesca McDonagh, Bank of Ireland chief executive, commented: “Bank of Ireland has been part of Ireland’s commercial, economic, and social fabric for almost 240 years, and we look forward to providing an excellent long-term home for KBC Bank Ireland customers.
“We are committed to delivering a smooth and seamless migration for KBC customers, ensuring strong customer protections and financial stability within the Irish banking sector and broader economy.”
Dilosk/ICS Mortgages will receive €500m of the Bank of Ireland funding for its securitisation programme.
CEO Fergal McGrath said: “This funding availability will support ICS Mortgages’ growth and ambitions to reach a 10% market share over the next few years. We also welcome the acknowledgment from the CCPC of the key role that non-bank lenders such as ICS Mortgages will provide in the medium term in promoting competition and providing an alternative choice to Irish consumers for their mortgage needs.”
Dilosk currently has circa €1.4 billion of mortgages under management.
