The Bank of Ireland will have to help its competitors – Dilosk and Finance Ireland – finance the purchase of KBC’s mortgage book in the form of a €1bn funding pot.
That mortgage pop – split 50:50 between the two non-banks – is the only major measure imposed on the Bank of Ireland by the Competition and Consumer Protection Commission (CCPC) as a condition for a deal to buy an approximately €9bn mortgage and loan. is in the form. From KBC.
The CCPC on Tuesday said a so-called phase two investigation “will not significantly reduce competition” in the Irish mortgage market after the bank waved through the deal after being subject to agreed terms.
The competition approval removes a major potential hurdle on the sale ahead of the bank’s annual general meeting on Thursday, though it is still subject to ministerial approval.
As part of the agreement, the Bank of Ireland also agreed to provide €1m of funding for companies involved in developing innovations in the mortgage market in Ireland.
KBC Mortgage customers will be entitled to the same fixed rate availed on KBC for the remaining fixed term of their mortgage and will get 0.2 per cent discount on mortgage for having a current account with KBC. Ireland Current Account.
Bank of Ireland has also pledged to offer KBC customers uniform variable rate and fixed rate options on their first roll-over post-migration.
According to Dewey’s Diremade Sheridan, the €1bn lending for Dilosk and Finance Ireland helps create certainty as they move into a higher interest rate environment.
This gives certainty to the other funders of the two lenders around the still developing market. Dilosk and Finance Ireland finance their loans on the bond market by mortgaging and borrowing against them. This is set to be more expensive than the savings the Bank of Ireland uses to fund its loans.
“The €1 billion is going to ensure that there are more than three lenders in the mortgage market, something the CCPC will be concerned about,” Mr Sheridan said.
He said the measures imposed on Bank of Ireland point to a mild outcome in the acquisition of Ulster Bank’s mortgage and retail loan book for smaller rival Permanent TSB.
He added that permanent TSBs can also be asked to support alternative lenders but on a smaller scale.
Dilosk’s chief executive and co-founder Fergal McGrath said the agreement marked the acceptance of the CCPC’s now important role of “non-bank lenders” in consumer finance.
The money deal to support alternative lenders falls short of a possible measure of closing a piece of KBC Ireland’s mortgage to a new or niche lender as a “seed” for an immediate increase in scale.