CCPC clears Bank of Ireland-KBC deal but imposes conditions
The Competition and Consumer Protection Commission has cleared, subject to a number of legally binding conditions, the proposed €5 billion acquisition by Bank of Ireland of KBC Bank Ireland’s performing loans and deposits.
The clearance of the proposed deal would see Bank of Ireland buy KBC’s performing loan assets, including performing mortgages, and commercial and consumer loans and a small number of non-performing mortgages.
But the competition watchdog has attached a range of conditions to the deal to ensure competition in the mortgage market is maintained.
The CCPC had carried out a preliminary investigation of the proposed acquisition and concluded that a full investigation was needed to see if the deal could lead to a substantial lessening of competition in the State.
It said its full investigation had identified significant competition concerns arising from KBC’s exit from the mortgage market in Ireland.
The CCPC said a key issue in its decision was the strength of competition that non-bank lenders will provide in the medium term, given expectations of a rising interest rate environment.
Due to these concerns, the CCPC considered it was important that non-bank lenders in the mortgage market here be supported in their continued growth and role as emerging competitors in the sector.
In response to the CCPC’s concerns, Bank of Ireland has committed to supporting the growth of non-bank lenders – Dilosk DAC, which trades as ICS Mortgages, and Finance Ireland – in the Irish mortgage market.
It has commited to making €1 billion in funding available to these non-bank lenders through the purchasing of securities issued by them, to increase their funding capacity and reduce their cost of funding.
Bank of Ireland will also assist innovation in the Irish mortgage market and make €1m in funding available to companies involved in developing innovations for the provision of mortgages in the State.
Bank of Ireland said it will honour the fixed rate included in the existing terms and conditions of KBC fixed rate mortgages for the remainder of the fixed term,
It will also honour the 0.2% discount in mortgage rate of every KBC customer eligible for that discount at the date of mortgage transfer to Bank of Ireland for as long as their transferred mortgage is held with the bank and without being required to hold a Bank of Ireland current account.
Bank of Ireland has also committed to offering the variable rate equivalent to that of KBC migrated variable rate customers, as well as its fixed rate options, to fixed rate KBC mortgage customers on their first roll-over post-migration.
“Following detailed consideration and further analysis and having taken into account the above commitments given by Bank of Ireland, the CCPC has determined that the proposed acquisition will not substantially lessen competition and, therefore, the proposed acquisition can be put into effect,” the CCPC said in a statement today.
Francesca McDonagh, Group Chief Executive of Bank of Ireland, said she welcomed today’s announcement, adding that it was an important step towards the completion of the deal.
“Bank of Ireland has been part of Ireland’s commercial, economic, and social fabric for almost 240 years, and we look forward to providing an excellent long-term home for KBC Bank Ireland customers,” the Bank of Ireland CEO said.
“We are committed to delivering a smooth and seamless migration for KBC customers, ensuring strong customer protections and financial stability within the Irish banking sector and broader economy,” she added.
In a statement today, KBC Bank Ireland said that customers do not need to take any immediate action as a result of this announcement as the agreement remains subject to ministerial approval.
The bank said that all customers will shortly receive a booklet which will outline what is happening to all KBC products.
Following a full approval of the deal, customers will then receive individual communications on each of their products providing them with notice of future changes and outlining what actions or steps (if any) they need to take.
KBC said it will ensure customers are provided with plenty of notice of any impact and/or changes to their account in line with all legal and regulatory protections.
Dilosk and Finance Ireland to get €1 billion in funding from Bank of Ireland
Dilosk today welcomed the announcement by the Competition and Consumer Protection Commission (CCPC) that Bank of Ireland will make available €1 billion in total funding to Dilosk and Finance Ireland through the purchase of residential mortgage backed securities to be issued in the future.
It said this commitment will contribute to the Irish mortgage market through an increase in funding and an expected reduction in the cost of funding.
Dilosk earlier this month agreed its largest warehouse facility with three international investment banks providing it with up to €900m of funding.
It said Bank of Ireland’s commitment to invest in future residential mortgage backed securities will further support its continued growth ambitions and success.
Fergal McGrath, CEO & co- founder of Dilosk, welcomed the news that the company has been announced as one of the two recipients that will receive €500m each for a securitisation programme over the next three years.
“This funding availability is a positive development for the Irish mortgage market which will support ICS Mortgages’ growth and ambitions to reach a 10% market share over the next few years,” Mr McGrath said.
“We also welcome the acknowledgment from the CCPC of the key role that non-bank lenders such as ICS Mortgages have now, and will provide in the medium term in promoting competition and providing an alternative choice to Irish consumers for their mortgage needs,” he added.
Dilosk currently has about €1.4 billion of mortgages under management.