Permanent TSB has formally agreed to acquire EUR 7.6 billion of assets from Ulster Bank Ireland.
The bank today announced that it has entered into legally binding agreements with Ulster Bank and its owner NatWest Group to purchase the retail, SME and asset finance businesses of Ulster Bank.
The deal includes Ulster Bank’s € 7 billion performing residential mortgage portfolio and its performing SME loan portfolio – valued at € 230 million.
It also includes all of Lombard Asset Finance’s credit activity – for an amount of € 400 million – and 25 branches of Ulster Bank’s branch network.
The permanent TSB also said that around 450 Ulster Bank employees assigned to the companies being acquired will be entitled to transfer to the permanent TSB.
As part of the deal, NatWest will also acquire 16.66% of Permanent TSB Group Holdings, the bank said in a statement.
The two banks had reached a non-binding memorandum of understanding for parts of Ulster Bank’s retail and SME business here in July.
Ulster Bank announced earlier this year that it would withdraw from the Irish market in the next few years in a deal that will be run in “an orderly and thoughtful manner”.
Ulster Bank, which is owned by UK lender NatWest, has 1.1 million customers here as well as 2,800 employees in 88 branches across the country.
Today’s deal remains subject to obtaining the required regulatory approvals from the Competition and Consumer Protection Commission, the Central Bank and the approval of TSB’s permanent shareholders.
It should end at the end of 2022 or the beginning of 2023.
The permanent TSB said the assets included in today’s deal will increase its mortgage portfolio by around 40% from its end-2020 level and its branch network by around 30%.
Its business loans will also triple in size from its end-2020 level by integrating loans to SMEs and the established activity of financing assets being bought out.
“This is a decisive step in the transformation of Permanent TSB into Ireland’s best bank for individuals and small businesses,” said Eamonn Crowley, Managing Director of Permanent TSB.
“This will give us a much larger scale and greater diversification of business models, as well as many more customers and branches to fuel our ambition to grow and build a sustainable organization for the future,” said the CEO.
Mr Crowley said that reaching a binding agreement is an important step forward and supports the bank’s organic growth strategy while seizing this “unique opportunity” to accelerate the growth of Permanent TSB.
“We look forward to starting the integration of Ulster Bank’s business into our bank and welcoming Ulster Bank clients to the permanent TSB – those whose loans are transferred as part of this transaction as well as the clients of the accounts. Ulster Bank currents and deposit which will need a new banking relationship, ”he said.
“We also look forward to welcoming new colleagues into the bank, bringing with them expertise, commitment and customer focus that will be invaluable,” he added.
Ulster Bank said today that none of its customers need to take action.
The bank said if they are potentially affected by today’s announcement, it will be in contact with them directly and letters and emails will be sent to potentially affected customers as soon as possible by early January. .
Ulster Bank said there are other customers and customer products that are not covered by today’s deal, adding that it will provide an update on these as soon as possible.
Although carrying out follow-on mortgages is not part of today’s deal, Ulster Bank and NatWest Group are working on a path for these clients and a process is underway in this regard, he said. added.
Ulster Bank also said there was no change to other commitments it has made. He added that he does not envisage a bank-wide voluntary departure plan in the first half of 2022 and that he does not plan to close any branches in the first six months of 2022.
Ulster Bank chief executive Jane Howard said she was delighted that the bank’s deal with the permanent TSB had become a binding agreement.
“I am convinced that this agreement with Permanent TSB will provide a positive solution for our customers and our colleagues. We will continue to work with our colleagues and their representatives to manage this process in a fair and responsible manner, ”said Jane Howard.
“A key part of the process now is to finalize regulatory approvals, this will likely take several months and we will continue to keep our customers informed throughout this process,” she added.
NatWest Group CEO Alison Rose said today’s announcement is a key step in Ulster Bank’s phase-out from the Republic of Ireland.
“Our priority is to support our clients and colleagues throughout this transition and to work closely with the permanent TSB to ensure the success of this agreement,” added Ms. Rose.
Finance Minister Paschal Donohoe said today’s deal is a very positive development for Permanent TSB and represents an important opportunity for the bank, its stakeholders and clients to consolidate its position in the Irish banking market and to position itself for future growth.
“With the withdrawal of Ulster Bank and KBC from the Irish market, a larger scale PTSB has a more important role than ever in providing meaningful competition to consumers in terms of product choice and price,” said the Minister.
“For these Ulster Bank borrowers, it gives them certainty as to where their loans are going, while depositors will have the choice to move their business to PTSB next year. The transaction also offers a large number of Ulster Bank employees comfort in terms of job security, ”he added.
The minister also said he remained in favor of the PTSB as a shareholder on behalf of the state, while noting that the ongoing approval processes remained with the Competition and Consumer Protection Commission as well as the Central Bank which will end next year.
Permanent TSB shares were higher in Dublin trading today.