Watchdog clears Bank of Ireland’s €9bn deal with KBC despite ‘significant’ concerns

The competition and consumer regulator (CCPC) has authorized the sale of KBC Bank Ireland’s €9bn loan portfolio to Bank of Ireland, subject to a number of conditions to ensure that competition in the mortgage market is maintained.

With the sale, Bank of Ireland would acquire KBC’s outstanding credit assets, including outstanding mortgages and commercial and consumer loans, and a small number of non-performing mortgages.

The watchdog launched a full investigation into the proposed purchase in October 2021 after an extended preliminary investigation concluded.

The CCPC said its full investigation identified “significant competition concerns” stemming from KBC’s exit from the Irish mortgage market.

He said a key issue he identified is the strength of competition that non-bank lenders will provide in the medium term, given expectations of a rising interest rate environment.

“In light of these concerns, the JPAC considered it important that non-bank lenders operating in the Irish mortgage market be supported in their continued growth and role as emerging competitors in the sector,” JPAC said in a statement.

In response to concerns, the Bank of Ireland has committed to making €1 billion in total funding available to certain non-bank lenders by purchasing securities issued by them, to increase their funding capacity and reduce their cost of funding. .

The bank has also committed to making 1 million euros of financing available for distribution to companies involved in the development of relevant innovations for the mortgage granting market in the State.

To address the effects of the transaction on KBC’s mortgage customers, Bank of Ireland will honor the fixed rate included in KBC’s existing fixed rate mortgage terms and conditions for the remainder of the fixed term.

Bank of Ireland will honor the fixed rate included in the existing terms and conditions of KBC Fixed Rate Mortgages for the remainder of the fixed term.

It will also honor the 0.2% discount on the mortgage rate of each KBC customer eligible for that discount on the date of the transfer of the mortgage to Bank of Ireland for as long as the transferred mortgage is held in the bank and not required to have a Bank of Ireland. Ireland current account.

The bank also committed to offering the variable rate equivalent to that of KBC’s migrated variable rate clients, as well as the Bank of Ireland’s fixed rate options, to KBC’s fixed rate mortgage clients on their first renewal after the migration.

“After detailed consideration and further analysis and having taken into account previous commitments made by the Bank of Ireland, the JPAC has determined that the proposed acquisition will not materially lessen competition and therefore the proposed acquisition may proceed. out,” the JPAC statement continued.

Francesca McDonagh, Bank of Ireland Group CEO, welcomed the announcement, calling it an “important step towards the completion of this acquisition”.

#open journalism

No news is bad news
Support the journal

Their contributions will help us continue to deliver the stories that matter to you

support us now

“Bank of Ireland has been part of the commercial, economic and social fabric of Ireland for nearly 240 years, and we look forward to providing a great long-term home for KBC Bank Ireland customers,” he said.

We are committed to providing a smooth and seamless migration for KBC clients, ensuring strong client protection and financial stability within the Irish banking sector and the wider economy.

In a statement, KBC Bank Ireland said that customers do not need to take any immediate action as a result of the announcement, as the deal remains subject to ministerial approval.

The bank said all customers will shortly receive a brochure “which will clearly describe what is happening with all KBC products.”

“Upon full approval of this agreement, customers will receive individual communications about each of their products, providing them with notice of future changes and outlining what actions or steps (if any) they should take,” the statement continued.

KBC said it will ensure that customers receive sufficient notice of any impact and/or change to their account in accordance with all legal and regulatory protections.

Add Comment