AIB Group PLC Acq of Ulster Bank tracker mortgage portfolio (6525N)
02 June 2022 - 3:09AM
UK Regulatory
TIDMAIBG
RNS Number : 6525N
AIB Group PLC
01 June 2022
1 June 2022
AIB Group plc confirms acquisition of Ulster Bank performing
tracker mortgage portfolio
AIB Group plc ("AIB", the "Group") confirms that Allied Irish
Banks, p.l.c. (1) has today entered into a binding agreement with
NatWest Group plc and Ulster Bank Ireland DAC ("UIster Bank") for
the acquisition of a performing Ulster Bank tracker (and linked)
mortgage portfolio with an expected value of circa EUR5.7
billion(2) (the "Transaction"). This agreement has been reached
further to the exclusive discussions that were announced on 29
April 2022 following a period of due diligence on the
portfolio.
AIB will acquire the portfolio consisting of circa 47,000 Ulster
Bank customers for a total consideration of EUR5.4 billion
equivalent to 95.15% of par value, payable in cash funded from its
existing resources. The exact consideration payable will depend on
movements in the portfolio up to completion. AIB intends to engage
a third party service provider to administer the portfolio on its
behalf. This servicing arrangement will have no impact on customers
who will retain their existing terms and conditions. The
Transaction remains subject to obtaining any necessary customary
regulatory approvals. AIB will acquire an economic interest in the
mortgage portfolio in the second half of 2022 with formal
completion expected in 2023.
The Transaction is expected to be accretive to earnings in 2023.
On an annualised basis and inclusive of discount unwind, AIB
expects total income of c. EUR90m and a 30bps average servicing
cost. As required under IFRS 9, AIB will incur a Day 1 expected
credit loss (ECL) charge as the portfolio migrates following formal
completion.
AIB anticipates the Transaction to reduce CET1 by c. 70bps
reflecting increased risk weighted assets of c. EUR2.5 billion(3) .
AIB's fully loaded CET1 at end March 2022 was 16.6% with a further
130bps CET1 reduction expected in relation to the agreed
acquisition of Ulster Bank's corporate and commercial loans. The
Transaction is also expected to be enhancing to RoTE in 2023, as
AIB progresses towards its medium-term RoTE target of greater than
9% in 2023.
AIB Chief Executive, Colin Hunt, commented:
"We are delighted to have reached agreement with NatWest and
Ulster Bank on another loan book acquisition and look forward to
welcoming these customers to AIB. This acquisition further adds to
our growing balance sheet and progress towards our strategic
targets. Our strong capital position, which is well ahead of our
medium-term target of >13.5%, enables us to invest in our
business, pursue RoTE accretive inorganic opportunities and make
distributions to shareholders."
[1] A subsidiary of AIB Group plc
[2] Portfolio size c. EUR6 billion at end March 2022
[3] Risk weighted assets may differ from what NatWest
derecognise following the sale of assets
-ENDS-
For further information, please contact:
Niamh Hore / Siobhain Walsh Paddy McDonnell / Graham Union
Investor Relations Media Relations
AIB Group AIB Group
Dublin Dublin
Tel: +353-1-6411817 / +353 -87-3956864 Tel: +353-87-7390743 / +353-1-6412430
email: niamh.a.hore@aib.ie email: paddy.x.mcdonnell@aib.ie
siobhain.m.walsh@aib.ie Graham.x.union@aib.ie
Forward Looking Statements
This document contains certain forward looking statements with
respect to the financial condition, results of operations and
business of AIB Group and certain of the plans and objectives of
the Group. These forward looking statements can be identified by
the fact that they do not relate only to historical or current
facts. Forward looking statements sometimes use words such as
'aim', 'anticipate', 'target', 'expect', 'estimate', 'intend',
'plan', 'goal', 'believe', 'may', 'could', 'will', 'seek',
'continue', 'should', 'assume', or other words of similar meaning.
Examples of forward looking statements include, among others,
statements regarding the Group's future financial position, capital
structure, Government shareholding in the Group, income growth,
loan losses, business strategy, projected costs, capital ratios,
estimates of capital expenditures, and plans and objectives for
future operations. Because such statements are inherently subject
to risks and uncertainties, actual results may differ materially
from those expressed or implied by such forward looking
information. By their nature, forward looking statements involve
risk and uncertainty because they relate to events and depend on
circumstances that will occur in the future. There are a number of
factors that could cause actual results and developments to differ
materially from those expressed or implied by these forward looking
statements. These are set out in the Principal risks on pages 28 to
30 in the 2021 Annual Financial Report. In addition to matters
relating to the Group's business, future performance will be
impacted by direct and indirect impacts of the COVID-19 pandemic
and by Irish, UK and wider European and global economic and
financial market considerations. Any forward looking statements
made by or on behalf of the Group speak only as of the date they
are made. The Group cautions that the list of important factors on
pages 28 to 30 of the 2021 Annual Financial Report is not
exhaustive. Investors and others should carefully consider the
foregoing factors and other uncertainties and events when making an
investment decision based on any forward looking statement.
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END
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