Natwest Group had agreed to sell most of its Irish commercial lending business to regional peer Allied Irish Banks. This is as a part of the British lender’s planned exit from Ireland.
This deal will see AIB to take over around 4.2 billion euros in gross performing commercial lending and undrawn exposures of around 2.8 billion euros from NatWest’s Ulster Bank. Natwest said that it expects to make a small gain on the disposal. 280 employees will transfer to AIB, as per this deal. In February NatWest was to wind down its Irish arm. This is as the Chief Executive Alison Rose slashes underperforming parts of the state-owned lender after a loss in 2020.
AIB gave a separate statement that it would pay 4.1 billion euros for the loans. This is equivalent to 97.63% of par value. It plans to migrate the loans over 12-18 months, after receiving regulatory approval. AIB also said that this deal would be accretive to earnings from 2023. 100 million euros a year as the net interest income can be provided by this. This deal would cut AIB’s core tier 1 ratio, that is a measure of financial strength, by around 145 basis points. It also said that its CET1 ratio remains above its 14% target, at 15.8% at the end of the first quarter. AIB Chief Executive Colin Hunt said that AIB’s landmark acquisition of Ulster Bank’s 4.2 billion euro corporate and commercial loan book will further underpin the bank’s ambitious growth plans and position them to support the business community and Ireland’s economic recovery as they emerge from the pandemic.