REG - AIB Group PLC - Acq of Ulster Bank tracker mortgage portfolio

AIBAnnouncement

01/06/2022 18:15

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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 €5.7 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 €5.4 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. €90m 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. €2.5 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. €6 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 (mailto:niamh.a.hore@aib.ie)     email:       paddy.x.mcdonnell@aib.ie
                    siobhain.m.walsh@aib.ie                                          Graham.x.union@aib.ie
 (mailto:siobhain.m.walsh@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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