Bank of Ireland Group has agreed to acquire substantially all of the performing loan portfolios and deposits of KBC Bank Ireland (KBCI), a subsidiary of Belgian financial services firm KBC Group, for €5bn.
As per terms of the deal, Bank of Ireland will acquire €8.8bn of performing mortgages, €100m of performing commercial and consumer loans, and deposits of €4.4bn.
The Irish banking group will buy the performing mortgages for 103.6% of par value.
Bank of Ireland said that the actual size of the portfolio and consideration payable will differ from now and completion as it will be contingent on normal business flows.
Additionally, the Irish group will buy a small portfolio of non-performing mortgages (NPEs) of €300m as part of the deal, at a discount to par.
Bank of Ireland said that the acquisition supports its financial goals.
Based on the current size of the portfolio, the Irish group has projected an incremental net interest income of €160m in 2023, which will come down over time as the portfolios redeem.
Bank of Ireland Group CEO Francesca McDonagh said: “This acquisition is a positive development for our business and consistent with our growth strategy. We look forward to supporting our new customers on their important financial decisions over the years ahead.”
For KBC Group, the deal marks a key step in its pullout from the Irish market. The sale has been taken up by the Belgian group based on the challenging operational context for European banks.
KBC Group CEO Johan Thijs said: “The transaction remains subject to regulatory approvals. Yet, I’m 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.
“We remain committed to managing this process responsibly over the coming period.”
The closing of the deal is subject to the meeting of customary conditions, which includes approval from the Irish Competition and Consumer Protection Commission.
