The competition watchdog has stepped up its investigations into the state of competition in Ireland’s banking sector by announcing a full-scale investigation into AIB’s plans to take out â¬ 4.2 billion in loans to the ‘Ulster Bank, when the third largest lender completes its withdrawal from the Republic.
This is the third major or so-called Phase 2 banking investigation to be announced by the Competition and Consumer Protection Commission (CCPC) and reflects widespread concerns that customers will be the big losers when existing lenders contract. billions in loans from Ulster and KBC Bank, which is also considering pulling out.
Regarding the AIB’s plans, the regulator said that “following a thorough preliminary investigation, the CCPC has determined that a full investigation is necessary in order to establish whether the proposed transaction could result in a substantial decrease in competition in the state â.
The watchdog has already launched a full Phase 2 investigation into Bank of Ireland’s plans to secure â¬ 8.8 billion in home loans and â¬ 4.4 billion in deposits from KBC, and is examining separately from other plans involving major Irish banks to set up a bank payments system. application called Synch.
Permanent TSB’s (PTSB) plans to secure â¬ 7.6 billion in loans from Ulster and for Ulster owner NatWest to take an almost 17% stake in PTSB will also now be likely to be fully investigated by the CCPC, said Ronan Dunne, partner and head of EU and competition at law firm Philip Lee.
Mr Dunne said the competition regulator is not lightly embarking on Phase 2 investigations and “sends a signal that competition concerns must be resolved before deal approvals” are given.
“Big decisions will be taken by the CCPC in the coming months which will shape the Irish banking landscape for the next 10 years,” said Mr Dunne.
He said major competitive decisions on Ulster and KBC loan portfolios are likely to determine whether major new banking entrants find it useful to launch banking services in the Republic.
Mortgage brokers and consumer advocates have long warned of the dominance of a few lenders in the Republic’s banking sector.