Irish banking will shrink if Ulster and KBC lenders leave the market. In particular, the Bank of Ireland and the AIB will “strengthen their dominant positions in the domestic market,” said ratings firm DBRS Morningstar.
The assessment comes from talks between the owner of Ulster Bank, NatWest, about the sale of corporate loans of EUR 4 billion to AIB and a large part of the entire mortgage book to Permanent TSB. KBC is in discussion with the Bank of Ireland to sell almost all non-acidic mortgage loans to the Bank of Ireland.
According to DBRS, AIB had net loans in the republic of EUR 48.6 billion, of which EUR 17.4 billion were loans to companies and SMEs.
“The [Ulster] The acquisition could increase its Irish loan portfolio by 8% and its Irish corporate and SME loan portfolio by 23%, “she said.
The Bank of Ireland had loans of EUR 47 billion in the Republic. The purchase of EUR 9 billion in loans from KBC increased total loans by 19% and the home loan by 39%.
For PTSB, a deal with NatWest could “double the size of its assets,” DBRS said, noting that PTSB has not yet signed a memorandum of understanding.
“If the transactions were approved by regulators, BoI and AIB could further strengthen their dominant positions in residential real estate mortgages as well as in SMEs and corporations,” it said.
One of the reasons foreign lenders decided to quit was the comparatively high capital requirement the Central Bank of Ireland was demanding for mortgage lending in the republic, DBRS said.