PTSB said it has entered into a €7.6bn (£6.48bn) legally binding agreement to buy Ulster Bank’s Retail, SME and asset finance business.
The deal includes Ulster’s €7bn performing non-tracker residential mortgage book, its €230m performing SME loan book and its €400m (£341m) Lombard Asset Finance business.
The deal also includes 25 of Ulster Bank’s branch network.
“This is a decisive step in transforming Permanent TSB to be Ireland’s best personal and small business bank,” PTSB chief executive Eamonn Crowley said in a statement.
NatWest owned Ulster Bank has 1.1 million customers in the Republic of Ireland along with 2,800 staff in 88 branches around the country.
PTSB expects to complete the acquisition of Lombard Asset Finance loans by no later than 30 June 2023.
John Cronin, a financials analyst for Goodbody, said:
“These are long-dated timeframes and reflect the complexity of the transactions as well as the fact that the Competition and Consumer Protection Commission, the Central Bank of Ireland, and shareholder approvals will be necessary.
“As a result, PTSB expects to acquire less than €7.6bn of loan assets (due to redemptions in the interim) and envisages that it will acquire €6.5 to 7bn of loan assets at completion at a 2 per cent discount to book value.
“Importantly, the gain on the transaction is expected to be recognised at completion. The transaction will be funded from internal sources and existing funding sources (PTSB expects to capture some of the pool of Ulster Bank deposits) in addition to the issue of PTSB shares to NWG in exchange for a 16.66 per cent shareholding.”