AIB in talks to buy Ulster Bank’s €6.5bn tracker loans

AIB is in talks to acquire Ulster Bank's low-profit €6.5 billion tracker loan book in the Republic, according to sources.

The development comes a month after AIB agreed to buy €4.1 billion of corporate and business loans from Ulster Bank, as the latter goes about withdrawing from the market.

Sources say that AIB will be expected to buy the book at a discount to reflect the fact that tracker loans are generating low returns, priced of the European Central Bank main rate, which is currently zero per cent.

A spokeswoman for Ulster Bank and a spokesman for AIB declined to comment.

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On Friday, Permanent TSB (PTSB) confirmed that plans to acquire €7.6 billion of loans and 25 branches from Ulster Bank, as the UK-owned lender retreats from the Republic.

Deal

PTSB and Ulster Bank's owner, NatWest Group, said that they had signed a memorandum of understanding on the shape of a proposed deal, which would also see between 400 and 500 Ulster Bank employees transfer.

The proposal would also see NatWest take a 20 per cent stake in PTSB as part payment.

PTSB, led by chief executive Eamonn Crowley, said that it does not envisage the need to raise additional capital to complete the transaction. Analysts had previously estimated that the bank may require up to €500 million of additional equity from shareholders, including the State, which owns 75 per cent of the group, to support the transaction.