The Competition and Consumer Protection Commission (CCPC) has cleared AIB’s proposed purchase of Ulster Bank’s €4.2 billion performing commercial loan portfolio.
But it also sounded a warning about the impact of Ulster Bank’s departure on wider competition in the banking market.
The CCPC said its investigation considered whether the planned agreement between AIB and Ulster Bank would lead to a substantial lessening of competition, but concluded that it would not.
“Based on a review of the evidence available to it, the CCPC accepted the parties’ argument that Ulster Bank would cease to provide commercial loans to state enterprises with a turnover greater than to 2 million euros, that the sale of its commercial loan portfolio to AIB has continued,” he said in a statement.
“The CCPC has considered whether the proposed acquisition would result in a substantial lessening of competition, compared to the alternative scenario of an exit from Ulster Bank by terminating its corporate lending or (in the case of commercial property lending) a selling the loans to another buyer, and found that would not be the case.”
But the commission also said Ulster Bank’s exit from the market means only two full-service banks will remain in the state to cater to businesses with turnover between 2 and 250 million euros. .
“International evidence shows that higher concentration in banking services is likely to have an adverse effect on competition, leading to poorer outcomes for corporate borrowers in terms of pricing, innovation and service,” said said the CCPC.
“This is corroborated by some of the commercial clients contacted by CCPC, who indicated that they had concerns about Ulster Bank exiting the state.”
The CCPC said it cannot approve or reverse a company’s decision to exit the Irish market, but has a responsibility to highlight “competitive concerns that arise as a result of the exit and which are likely to harm business customers and Ireland at large”. economy.”
He added that his concerns about the competitive banking landscape are highly relevant to the Department of Finance’s ongoing review of the sector and that he will continue to work with stakeholders to determine how the market can remain open and competitive.
AIB said it welcomes the CCPC approval and added that customers will be contacted in due course.
Ulster Bank also welcomed the move which will see around 280 of its staff transferred to AIB under the deal.
“This is a significant step forward in advancing our exit and our next steps, starting today and over the weeks and months to come, will be to communicate with colleagues who will move to the AIB under the TUPE element and communicating with the relevant customers who will be migrating under this,” he said.
“Our website will be updated with information for customers in the coming days.”