UK bank NatWest Group said it was selling most of its Irish commercial lending business to Allied Irish Banks as part of its exit from Ireland.
AIB will take over about €4.2bn in gross performing commercial lending and associated undrawn exposures of around €2.8bn from NatWest’s Ulster Bank.
In a separate statement, AIB said it would pay €4.1bn euros for the loans, equivalent to 97.63% of par value, using existing cash resources.
AIB said the deal would be accretive to earnings from 2023 and provide net interest income of around €100 a year. Additional annual costs after the deal would come in around €30m a year.
While the deal would cut AIB’s core tier 1 ratio – a measure of financial strength – by around 145 basis points, it said its CET1 ratio remains above its 14% target, at 15.8% at the end of the first quarter.
“AIB’s landmark acquisition of Ulster Bank’s €4.2bn corporate and commercial loan book will further underpin the bank’s ambitious growth plans and position us to support the business community and Ireland’s economic recovery as we emerge from the pandemic,” said AIB chief executive Colin Hunt.
Natwest forecast a small gain on the deal. It added that 280 staff will transfer to AIB.
