Allied Irish Bank (AIB) has signed a binding agreement to acquire Ulster Bank’s tracker and linked mortgage portfolio worth €5.7bn. 

AIB will pay around €5.4bn for Ulster Bank’s portfolio, which consists of 47,000 customers. 

The Irish bank plans to engage a third-party service provider to service Ulster Bank’s portfolio on its behalf. 

AIB expects the portfolio to generate a total income of around €90m and a 30bps average servicing cost on an annualised basis. 

AIB chief executive Colin Hunt said: “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.”

The deal is part of Ulster Bank’s phased withdrawal from the Republic of Ireland, which was announced by NatWest in February 2021.

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Subject to regulatory approval, the latest transaction is expected to complete in 2023. 

Ulster Bank chief executive Jane Howard said: “Today’s announcement is another significant step in Ulster Bank’s orderly, phased withdrawal from the market. We want to reassure customers that they will continue to retain their tracker mortgage in line with their mortgage documentation.

In June 2021, AIB brokered a deal to buy Ulster Bank’s performing corporate and commercial loan book. In April this year, the deal secured regulatory clearance from the Competition and Consumer Protection Commission (CCPC).