NatWest sells Irish lending division to AIB

30th June 2021

NatWest has announced that it is selling most of its Irish commercial lending business to Allied Irish Banks (AIB), which will take over about €4.2 billion in loans, €2.8 billion in undrawn facilities and about 280 transferred Ulster Bank employees.

The exact size of the portfolio and amount payable will depend on movements in the portfolio up to completion of the deal.

The transaction remains subject to customary regulatory approvals, after which, AIB intends to migrate the loan book on a phased basis over a period of 12-18 months. The deal is expected to be accretive to AIB earnings in 2023.

Based on the current portfolio size and following full loan migration, AIB expects a customer loan net interest income of around €100 milllio, as well as some related fee income per year.

Increased operational costs as a result of the transaction are expected to be approximately €30 million a year. AIB said it remains well-capitalised compared to its minimum regulatory requirements.

Approximately 280 employees who are directly involved in the servicing of the loan book will transfer to AIB under the Transfer of Undertakings legislation.

AIB CEO, Colin Hunt, said “The 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.”

“We continue to deliver on the strategy we announced last December to enhance and diversify our revenue streams and ensure AIB’s long-term sustainability.”

Jane Howard, Ulster Bank CEO, said “Today’s binding agreement represents a significant update on our phased withdrawal and although it remains subject to regulatory approvals, I am confident that we are with AIB, delivering a good solution for our performing commercial loan book customers. While we await approval, there remains no change for customers.”

NatWest had previously announced detailed plans to pull out of the Republic of Ireland in February.