It’s emerged that KBC Bank has entered into an talks with Bank of Ireland about taking over KBC’s performing loan book.
The move could lead to KBC leaving the Irish market.
In a statement to Agriland, KBC Bank Ireland has confirmed that it has entered into a Memorandum of Understanding (MoU) with Bank of Ireland, “expressing the parties’ intention to explore a route that could potentially lead to a transaction whereby Bank of Ireland commits to acquire substantially all of KBC Bank Ireland’s performing
loan assets and liabilities”.
The transaction remains subject to customary due diligence, further negotiation and agreement, as well as obtaining regulatory approvals.
KBC Bank loan portfolio
KBC’s remaining non-performing mortgage loan portfolio, which is not part of the MoU, is currently being analysed, whereby KBC Group is reviewing its options to divest this portfolio.
If these two transactions go ahead, it would ultimately result in KBC Group’s withdrawal from the Irish market.
KBC has said that while these discussions are ongoing, it remains “committed to offering its retail banking and insurance services of the highest level through its digital channels and hubs, for its existing and new customers”.
The bank adds that “there is no impact on KBC Bank Ireland customers, products or services and they do not need to take any action as a result of this announcement”.
Challenges for European Banks
Announcing the talks with Bank of Ireland, KBC Group CEO, Johan Thijs, said: “Over the last decade, KBC Bank Ireland has managed to build a digital-first retail bank and launched a digital pension insurance business for the Irish market.
“Given the challenging operational context for European banks, and after careful consideration, we have reached an agreement with Bank of Ireland Group regarding the potential sale to Bank of Ireland Group of substantially all of the performing loan assets and liabilities of KBC Bank Ireland.
“Next to this MOU, KBC Bank Ireland’s remaining non-performing mortgage loan portfolio is currently being reviewed for potential divestment,” he added.
Francesca McDonagh, Group CEO of Bank of Ireland continued: “When we look at opportunities, we consider if they are a good fit for the customers involved and for the bank.
“This MOU complements our strategy to grow our business in Ireland, and supports the investments we are making in the transformation of our systems and digital banking services.
“We would be very pleased to provide KBC Ireland customers with a good home, and look forward to progressing our discussions with KBC over the coming period,” she added.
No immediate changes for customers
KBC Bank Ireland CEO, Peter Roebben has said that customers of the bank will not experience any immediate changes.
“KBC Bank Ireland remains committed to offering its quality retail banking and insurance services. For the time being nothing changes, neither for existing nor for new customers,” he said.
“Our customers do not need to take any action as a result of today’s announcement. KBC continues to benefit from a strong liquidity and capital position.
“The board and the executive committee of KBC Bank Ireland are fully conscious of our responsibilities to our customers and colleagues, and the role of KBC as part of the Irish banking system, and we are fully committed to assuming those responsibilities while the talks with Bank of Ireland are ongoing,” he concluded.
Exit from Irish market
KBC’s decision to enter talks with Bank of Ireland comes on the back of an announcement made earlier this year by Ulster Bank, that it would be exiting the Irish market.
Ulster Bank, which forms part of the NatWest Group, entered an agreement that Allied Irish Banks plc. may purchase approximately €4 billion of performing commercial loans and the transfer of the colleagues wholly or mainly assigned to this loan book, as part of its phased withdrawal.