The Competition and Consumer Protection Commission (CCPC) has approved AIB’s proposed purchase of Ulster Bank’s commercial loan register for €4.2bn.
But it also sounded a warning about the impact of Ulster Bank’s exit on broader competition in the banking market.
JPAC said its investigation looked at whether the planned deal between AIB and Ulster Bank would significantly reduce competition, but concluded that it would not.
“On the basis of a review of the available evidence, the JPAC has accepted the parties’ argument that Ulster Bank will stop providing business loans to businesses in the state with a turnover of more than €2 million, regardless of whether the sale of its commercial loan portfolio continues to TII.”
“JPAC considered whether the proposed acquisition would significantly reduce competition, compared to the alternative scenario of Ulster Bank exiting by ending the commercial loans or (in the case of commercial real estate loans) selling the loans to an alternative buyer, and found that it would not.
But the committee also said Ulster Bank’s exit from the market meant only two full-service banks would remain in the state to serve businesses with turnover between €2m and €250m.
“International evidence shows that increased concentration in banking is likely to have a detrimental effect on competition, resulting in worse outcomes for commercial borrowers in terms of pricing, innovation and service,” the CCPC said.
“This has been demonstrated by some business customers contacted by CCPC, who have indicated they are concerned Ulster Bank will exit the state.”
The CCPC said it could not agree with or reverse the company’s decision to leave the Irish market, but that it had a responsibility to highlight “competition issues that arise as a result of the exit and which have the potential to harm business customers and the wider Irish economy.
He added that his concerns about the competitive banking landscape are closely related to the Department of Finance’s ongoing review of the sector and he will continue to work with stakeholders to consider how the market remains open and competitive.
AIB said it welcomed JPAC’s approval, adding that customers would be contacted in due course.
Ulster Bank also welcomed the decision that will see around 280 of its employees transfer to AIB as part of the deal.
“This is an important step forward in the progress of our recall and our next steps, beginning today and over the coming weeks and months, will be to communicate with colleagues who will be moving to AIB as part of the TUPE component and to communicate with affected customers. who will migrate as part of this.”
“Our website will be updated with information for customers in the coming days.”