22nd Oct 2021 10:22
(Alliance News) - Bank of Ireland Group PLC said Friday it has signed a binding agreement for the acquisition of a EUR8.8 billion performing mortgages portfolio from Belgian bank-insurer KBC Bank.
Back in April, Bank of Ireland said it entered talks to buy the loan assets and liabilities of KBC Group NV's Irish unit, as the Belgian bank looked to exit the country.
After the two banks signed a memorandum of understanding in April, Friday's binding agreement remains subject regulatory approval.
Shares in the Dublin-based lender were 2.6% higher in London on Friday morning at EUR5.17.
BoI Chief Executive Francesca McDonagh said: "We are delighted to have reached agreement with KBC on this important transaction. This acquisition is a positive development for our business and consistent with our growth strategy. We look forward to supporting our new customers on their important financial decisions over the years ahead."
The deal also includes about EUR100 million of performing commercial and consumer loans and about EUR4.4 billion of deposits, as well as EUR300 million of non-performing mortgages.
Bank of Ireland will pay a total of EUR5.0 billion for the portfolio, which will be funded through excess cash.
"The acquisition is supportive of the group's financial objectives," the lender said.
Bank of Ireland continued: "Based on current portfolio size, the group expects incremental net interest income of about EUR160 million in 20232, which will reduce over time as the portfolios redeem. The acquisition is facilitated by the investment in the group's infrastructure over recent years and is expected to reduce the group's cost income ratio and be earnings accretive, adding about 1.1% to group return on tangible equity in the first full year of ownership."
KBC CEO Johan Thijs added: "Today's agreement with Bank of Ireland Group regarding the sale to Bank of Ireland Group of substantially all of the performing loan assets and deposits of KBC Bank Ireland and a small portfolio of non-performing mortgages represents an important step in KBC group's withdrawal from the Irish market. The transaction remains subject to regulatory approvals."
By Paul McGowan; [email protected]
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