KBC Bank owner expects to complete Irish loans sale in 2022

Bank of Ireland is expected to acquire the loan book of the departing Belgian-owned bank in the second half of next year

The Belgian owner of KBC Bank in Ireland said it expects to complete the sale of its loans and deposits to Bank of Ireland in the second half of next year, after saying it took a hefty charge in its latest earnings report to take account of the looming transaction. 

KBC earlier this year became the second bank after Ulster Bank to say it was quitting the Republic, claiming it could make a better return on its capital elsewhere in Europe. 

In its latest results, the Belgian group said it posted €1.95bn in net profit for the first nine months of the year after taking account of a €261m loss from Ireland in the period "owing to the impact of the pending sale transactions there".

Nonperforming mortgages

In a statement, group chief executive Johan Thijs said the latest agreement in August to dispose of most of its nonperforming mortgage loans to Bank of Ireland amounted to a charge of €300m after tax in the quarter, "while there will be a positive impact of approximately €200m upon closure":  

The finalisation of both deals will ultimately lead to KBC withdrawing from the Irish market and will have a positive impact on our common equity ratio of approximately 0.9 percentage points.

"The transaction remains subject to regulatory — including Irish competition — approvals," Mr Thijs noted. 

The decision by KBC Bank, the Belgian lender, to exit the Irish banking market and for most of its €10.5bn of home loans to be bought by Bank of Ireland shook Irish banking this year. 

Its announcement in April came just weeks after the decision of Ulster Bank to shut up shop in the Republic and for its €20.5bn in mortgage and business loans to be carved up between Permanent TSB and AIB.

Bank of Ireland also decided to shut over 100 branches in the Republic and the North this year, while AIB bought back Goodbody Stockbrokers, and Bank of Ireland plans to buy Davy, Ireland’s largest stockbroker.