Ireland’s competition regulator has approved Bank of Ireland’s takeover of around €5 billion of KBC loans and liabilities.

After an inquiry, the Competition and Consumer Protection Commission said the sale “will not materially reduce competition in the Irish mortgage market, subject to the terms agreed by the Bank of Ireland”.

The agreement is still subject to ministerial approval.

As part of the deal, Bank of Ireland has agreed to make €1 billion of funding available to non-bank lenders such as Dilosk and Finance Ireland.

It has also been agreed to provide EUR 1 million in funding for companies involved in developing innovation in the mortgage market in Ireland.

KBC mortgage customers are entitled to the same fixed interest rate as they received from KBC for the remainder of their mortgage term.

Customers benefiting from a 0.2% discount for holding a current account with KBC can transfer this to Bank of Ireland without having to have a current account with Bank of Ireland.

Bank of Ireland has also committed to offering KBC customers equivalent floating rate and fixed rate options on their first post-migration rollover.

In April 2021, the Bank of Ireland announced that it would foreclose around €8.8 billion in non-performing mortgages from KBC, €0.1 billion in non-performing commercial and consumer loans and €4.4 billion in deposits and 0, will acquire €3bn in non-performing mortgages.

The total consideration to be paid was estimated at approximately €5 billion less contributions.

After filing, the CCPC conducted a preliminary investigation but, due to competition concerns, decided that a full investigation was needed before approving the transaction.

Bank of Ireland welcomed the announcement on Tuesday and said it was working “closely” with KBC to ensure safe customer transfers.

“I welcome today’s announcement which is an important step in completing this acquisition,” said Francesca McDonagh, outgoing Group Chief Executive of Bank of Ireland.

“Bank of Ireland has been part of the commercial, economic and social fabric of Ireland for almost 240 years and we look forward to providing customers of KBC Bank Ireland with an excellent long-term home.

“We are committed to providing a smooth and seamless migration for KBC customers, ensuring strong customer protection and financial stability within the Irish banking sector and wider economy.”

KBC said on Tuesday it “takes note” of the CCPC decision and that mortgage and loan customers do not need to take immediate action as the agreement is still subject to ministerial approval.

Current account customers who are not part of the deal will be contacted from June 1 and have six months to close their accounts.

Fergal McGrath, Chief Executive and Co-Founder of Dilosk (trading as ICS Mortgages), welcomed the €500 million the company will receive from the Bank of Ireland for its securitization program under the terms of the sale.

“This availability of funding is a positive development for the Irish mortgage market which will support ICS Mortgages’ growth and ambitions to reach a 10% market share over the next few years.

“We also welcome the CCPC’s recognition of the key role that non-bank lenders such as ICS Mortgages now have and will play over the medium term in promoting competition and providing Irish consumers with an alternative choice for their mortgage needs.”

Dilosk currently manages around €1.4 billion worth of mortgages.