DUBLIN (Reuters) -Bank of Ireland on Friday agreed to buy "substantially all" of KBC's Irish performing assets for 5 billion euros as the Belgian financial group confirmed it would become the latest lender to leave the shrinking Irish market.
The two banks announced they were in talks about the deal in April, just weeks after NatWest began winding down its Ulster Bank business in the Irish Republic. The departures leave Ireland with just three retail banks.
Bank of Ireland, the country's largest bank by assets with a loan book of 77 billion euros, said it would acquire 8.8 billion euros of performing mortgages, 100 million euros of performing commercial and consumer loans and 4.4 billion euros of deposits.
A portfolio of around 300 million euros of non-performing mortgages would also be acquired as part of the transaction, the joint statement from the two banks said.
"Today's agreement with Bank of Ireland Group regarding the sale ... of substantially all of the performing loan assets and deposits of KBC Bank Ireland ... represents an important step in KBC Group (OTC:KBCSY)'s withdrawal from the Irish market," KBC Group Chief Executive Johan Thijs said in a statement.
The transaction remains subject to regulatory approvals.
Exits by KBC and NatWest look set to further strengthen Bank of Ireland and main rival Allied Irish Banks' grip on their home market. AIB bought 4.2 billion euros of corporate and commercial loans from NatWest and is in talks to add some mortgage loans.
The smaller permanent TSB has also taken advantage, buying 25 of Ulster Bank's 88 branches and 7.6 billion euros of the former number three lender's gross performing loans.
Bank of Ireland said it was acquiring the performing mortgages for 103.6% of par value and that it expected incremental net interest income of around 160 million euros in 2023 as a result of the deal.
The exact size of the portfolio and consideration payable could vary between now and completion based on normal business flows, but is not expected to be materially different, the statement said.