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AIB to pay NatWest 5.4 billion euros for Irish tracker mortgage book


© Reuters. FILE PHOTO: The logo of NatWest Bank, part of the Royal Bank of Scotland group is seen outside a branch in Enfield, London Britain November 15, 2017. REUTERS/John Sibley

DUBLIN (Reuters) – Allied Irish Banks will pay NatWest (LON:NWG) Group 5.4 billion euros ($5.75 billion) to acquire its Irish tracker mortgage book as the British lender moves towards completing its exit from Ireland.

NatWest announced 15 months ago that it was winding down its Irish Ulster Bank unit and said on Wednesday that it had binding agreements in place for 90% of a total loan book that stood at about 20 billion euros.

AIB said the loans were worth 5.7 billion euros and would add 47,000 customers to the bank. The mortgages, which track the European Central Bank interest rate, a product no longer available on the market, will be administered by a third party service provider, AIB added.

Ireland’s largest mortgage lender expects the deal to generate annual income of around 90 million euros, a 30 basis points average servicing cost and cut its common equity Tier 1 (CET1) by around 70 basis points.

AIB had a fully loaded CET1 ratio of 16.6% at the end of March, well above its medium term target of 13.5%.

Belgian financial group KBC swiftly followed NatWest in announcing its exit from the Irish market last year and the two departing banks’ loan books have so far been carved up between Ireland’s three remaining high street lenders.

AIB has also acquired 3.7 billion euros of Ulster Bank’s commercial loans, while Permanent TSB paid 6.4 billion euros and gave NatWest a 16.66% share in the bank in exchange for Ulster’s non-tracker mortgage and micro-SME lending books and its asset finance business.

Bank of Ireland, the country’s largest bank by assets, agreed in October to a 5-billion euro deal to buy “substantially all” of KBC’s Irish performing assets.

($1 = 0.9397 euros)

AIB to pay NatWest 5.4 billion euros for Irish tracker mortgage book

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