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NatWest sells Ulster Bank commercial lending business for €4.1bn

NatWest has sold the majority of Ulster Bank’s corporate and commercial lending business to Allied Irish Banks (AIB) for €4.1bn, as part of the former’s retreat from the Republic of Ireland.

This loan book is €4.2bn in size with associated undrawn exposures of €2.8bn. Around 280 employees will transfer to AIB as part of the deal.

 

The €4.1bn sum is the total consideration being paid and is equivalent to 97.6% of par value for the assets.

 

Due diligence has been completed on the loan book with a memorandum of understanding between the parties being announced in February.

 

The migration of the loan book will take place on a phased basis over the next 12 to 18 months.

 

However, the deal itself remains subject to regulatory approvals.

 

NatWest Group chief executive Alison Rose said: "In line with our strategy of a phased withdrawal from the Republic of Ireland, I am pleased that we have now reached agreement with AIB on the sale of the majority of Ulster Bank’s performing commercial lending portfolio.”

 

AIB estimates customer loan net interest income of around €100m from this acquisition, with increased operational costs of around €30m a year.

 

The Irish bank anticipates the impact of this increase in risk weighted assets to be around 145 basis points of CET1.

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