KBC Ireland posts €298m loss amid slew of market exit costs

KBC Bank Ireland reported a net loss of €298 million last year, as it booked a raft of costs tied to its planned exit from the Republic, according to accounts published on Thursday by its Belgian parent.

The Irish unit took a €183 million impairment charge against its €10 billion mortgage-focused loan book, after agreeing to sell the bulk of the portfolio to Bank of Ireland and €1.1 billon of non-performing loans to US distressed debt investment firm CarVal Investors. The CarVal deal closed earlier this week.

KBC Bank Ireland’s operating expenses rose by €85 million to €313 million, understood to mainly comprise staff restructuring costs. The company had already said in November that it had taken €81 million of such costs.

While KBC Bank Ireland and Bank of Ireland have agreed to apply so-called Transfer of Undertakings Protection of Employment (TUPE) regulations, allowing employees to move on existing terms under a business or assets sale, the charge underscores that considerable redundancies are expected among KBC’s 1,300 workforce here.

Big ticket items back on agenda as personal loans soar

---

Grid Finance names former top Department of Finance official John Moran as chairman

---

Central Bank right not to rush on fintechs – Fleming

---

Credit Suisse shareholders take aim at vice-chair following scandals

---

Tax charge

KBC Bank Ireland also booked a €55 million tax charge, reflecting a write-off an accumulated tax benefit – or so-called deferred tax assets – resulting from losses racked up during the financial crisis.

Still, the group has said it will able to record a €200 million gain on the completion of the loan book sales, which would largely offset the charges taken in last year.

The Competition and Consumer Protection Commission moved in October to carry out a full phase-two investigation into Bank of Ireland’s planned purchase of KBC Bank Ireland’s mortgage-focused €9 billion of performing loans.

It is expected that the outcome of that assessment will be known by late March or early April. KBC expects the deal to go through in the second half of this year.

Bank of Ireland had a 25.5 per cent share of new mortgage lending in the Republic in 2020, while KBC slice of activity was 12.6 per cent.

Meanwhile, it set aside an additional €18 million of costs relating to its role in the Irish banking sector's tracker-mortgage scandal. The company took a €9 million provision in 2020, partly to cover a higher-than-expected €18.3 million Central Bank fine that year for its tracker-related regulatory breaches.