Bank of Ireland to help fund smaller rivals as part of KBC deal
DUBLIN, May 24 (Reuters) — Bank of Ireland has committed to make up to 1 billion euros ($1.07 billion) in total funding available to two smaller non-bank lenders as part of competition clearance granted on Tuesday for its deal to buy most of KBC Head Office‘s Irish assets.
Bank of Ireland, the country’s largest bank by assets, agreed in October to a 5 billion euro deal to buy «substantially all» of KBC’s Irish performing assets as the Belgian financial group become the latest lender to leave the shrinking Irish market.
To ameliorate any effects on competition, Bank of Ireland committed to purchase up to 1 billion euros of residential mortgage backed securities to be issued in the future by Finance Ireland and Dilosk, Ireland’s competition regulator said.
Bank of Ireland said the remedies will not materially impact the overall financial benefits of the acquisition. Analysts at Goodbody Strockbrokers said there had been some concern in the market that the regulator would impose stricter conditions.
Dilosk, whose ICS Mortgages brand has over 1.4 billion euros of mortgages under management, said in a statement that the agreement would reduce the cost of funding and boost its ambition to reach a 10% market share over the next few years.
Bank of Ireland, Allied Irish Banks and Permanent TSB had a combined 70% share of the mortgage market at the end of last year.The three are the only high street banks remaining in Ireland following the exits of KBC and NatWest’s Ulster Bank. ($1 = 0.9324 euros) (Reporting by Padraic Halpin; Editing by Muralikumar Anantharaman)