CCPC requires commitments from BOI to acquire KBC Ireland assets
May 24, 2022
The Competition and Consumer Protection Commission (CCPC) has cleared, subject to a number of legally binding commitments, the proposed acquisition by The Governor and Company of the Bank of Ireland (Bank of Ireland) of certain assets and liabilities of KBC Bank Ireland plc (KBC) (M/21/021).
The CCPC’s clearance of the proposed acquisition would see Bank of Ireland acquire KBC’s performing loan assets (including performing mortgages, and commercial and consumer loans) and a small number of non-performing mortgages.
Following notification to the CCPC in April 2021, the CCPC carried out a preliminary investigation of the proposed acquisition and concluded that a full investigation was required 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 arising from KBC’s exit from the mortgage market in Ireland. A key issue identified by the CCPC is 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.
Following detailed consideration and further analysis and having taken into account the above commitments given by Bank of Ireland, the CCPC has determined that the proposed acquisition will not substantially lessen competition and, therefore, the proposed acquisition can be put into effect.
The CCPC will publish its full determination on its website no later than 60 working days after the date of the determination and after allowing the parties the opportunity to request that confidential information be removed from the published version.
For more information, read the merger determination and the commitments.Return to News