AIB’s purchase of €4.2 billion in business loans from Ulster Bank is cleared

The Competition Authority has approved the sale of Ulster Bank’s €4.2 billion in commercial loans to AIB, insisting the deal will not hurt competition in the market.

This is despite the fact that the Competition Consumer and Protection Commission (CCPC), in its own determination, has acknowledged that international studies have shown that less banking competition leads to “worse outcomes for business borrowers in terms of pricing, innovation and service”.

“This is backed up by some of the corporate clients contacted by the CCPC who said they had concerns about Ulster Bank’s exit from the state,” she added.

Ulster Bank is in the process of leaving Ireland and signed its deal with AIB last summer. The Competition and Consumer Protection Commission announced in December that it would conduct a full investigation into AIB’s proposed takeover of Ulster Bank’s commercial loans.

“These assets consist of a portfolio of commercial loans,” the CCPC noted in a decision. “In addition to the commercial loans, some Ulster Bank staff will also be moving to AIB.

“Based on an examination of the evidence in its possession, the CCPC accepted the parties’ argument that Ulster Bank would stop providing commercial lending to companies in the State with a turnover of more than €2 million whether it was sold or not non-commercial loan portfolio continued to AIB,” it noted.

Ulster Bank’s withdrawal from the Irish market means only two full-service banks will remain in the state to serve the needs of businesses with sales of between €2m and €250m.

“The CCPC assessed whether the proposed acquisition would result in a significant reduction in competition … and determined that it would not,” the watchdog said.