Bank of Ireland faces 'significant concessions' to get €8.8bn in KBC mortgage loans
Bank of Ireland proposes to get €8.8bn of mortgage loans, €100m of commercial and consumer loans, as well as €4.4bn of deposits from KBC. The lender also plans to acquire €300m of non-performing mortgages.
Bank of Ireland will likely have to deliver "significant concessions" for its plan to acquire €8.8bn in mortgage loans from KBC to get the go-ahead, a leading competition lawyer has said.
It comes as the Competition and Consumer Protection Commission, or CCPC, issued a preliminary scorecard in its so-called Phase 2 full probe.
It reiterated the deal KBC struck with Bank of Ireland does involve a substantial lessening of competition in banking here.
The competition watchdog escalated its investigation in late October into a binding agreement under which Bank of Ireland proposes to get €8.8bn of mortgage loans, €100m of commercial and consumer loans, as well as €4.4bn of deposits from KBC. The lender also plans to acquire €300m of non-performing mortgages.
Belgian-owned KBC is well-known for offering some of the best value rates to mortgage borrowers and for providing competition to the dominant lenders — AIB, Bank of Ireland, and Permanent TSB.
Its decision last year to follow Ulster Bank and close up completely in the Republic further rocked the banking industry here, a market that has long been known for the grip exerted by a small number of banks that offer some of the most costly mortgage and business loans in Europe.
Ronan Dunne, head of EU competition law at Philip Lee, said the assessment by the CCPC in the KBC case marked a regular step but that it was substantial nonetheless. Based on competition law cases, "if I were to bet on it, I would say the CCPC will impose significant conditions" for its deal with Bank of Ireland to go ahead, Mr Dunne said.
In a stock market announcement, Bank of Ireland said it noted "the CCPC's preliminary view, at this stage of the process, is that the proposed transaction is likely to give rise to a substantial lessening of competition in relation to the market for the provision of mortgages in the State".
In its announcement, the watchdog said Bank of Ireland and KBC have 15 days to respond. "Based on the timelines as set out in the CCPC’s merger review process, it is expected that the investigation will conclude by May 2022," it said.
The watchdog is also carrying out a full Phase 2 probe into the plans by a number of Irish banks to set up a banking payments app, as well as fully investigating AIB's involvement in the carve-up of Ulster Bank's loan books.
It announced on New Year's Eve its decision to probe AIB's plans to acquire €4.2bn in commercial loans from Ulster. Experts expect the watchdog will also soon announce a full probe into Permanent TSB's plans to acquire mortgage loans from Ulster.
Meanwhile, Ulster Bank-owner NatWest said on Friday it was continuing "to make progress on its phased withdrawal".
Under its deal with Permanent TSB, NatWest proposes to sell €7.6bn of performing mortgage loans, but excluding tracker home loans mortgages, and 25 branches. The deal also includes micro-business loans and its asset finance business.
It said it expected to have completed most of the transaction by the end of the year.
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