CCPC requires commitments from BOI to acquire KBC Ireland assets

Competition and Consumer Protection Commission clears the acquisition by Bank of Ireland of certain assets and liabilities of KBC

The CCPC has approved, subject to Bank of Ireland entering into a number of legally binding commitments, the proposed acquisition by Bank of Ireland of certain assets and liabilities of KBC Bank Ireland plc.

The transaction, notified to the CCPC in April, warranted a full investigation by the CCPC to establish if the proposed transaction could lead to a substantial lessening of competition in the State.

The CCPC’s full investigation identified significant competition concerns regarding the strength of competition that non-bank lenders will provide in the medium term, given expectations of a rising interest rate environment. In light of these concerns, the CCPC considered it important that non-bank lenders operating in the Irish mortgage market be supported in their continued growth and role as emerging competitors in the sector.

In response to these concerns, Bank of Ireland committed to the following remedies:

  • in support of the growth of non-bank lenders in the Irish mortgage market, make €1 billion in total funding available to certain non-bank lenders through the purchasing of securities issued by them, to increase their funding capacity and reduce their cost of funding; and,
  • to assist innovation in the Irish mortgage market, make €1 million in funding available for distribution to companies involved in developing innovations relevant to the market for the provision of mortgages in the State; and
  • to address the effects of the transaction on KBC mortgage customers, Bank of Ireland will adopt measures, including:

• honouring the fixed rate included in the existing terms and conditions of KBC fixed rate mortgages for the remainder of the fixed term,
• honouring the 0.2% discount in mortgage rate of every KBC customer eligible for that discount at the date of mortgage transfer to BOI, for as long as their transferred mortgage is held with BOI, without being required to hold a BOI current account, and,
• offering the variable rate equivalent to that of KBC migrated variable rate customers, as well as BOI fixed rate options, to fixed rate KBC mortgage customers on their first roll-over post-migration.

On the basis of the above commitments, the CCPC has determined that the proposed acquisition can be put into effect.

If you have any questions about this article, please contact Roisin Caulfield from our Corporate Department or your usual Whitney Moore contact.