UK’s NatWest Group has signed an agreement to divest retail businesses of its Irish arm Ulster Bank to Permanent TSB (PTSB).

The deal will see Irish government-backed Permanent TSB pay approximately €6.4bn in cash for Ulster Bank’s operations.

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Additionally, Permanent TSB will issue 90.9 million new ordinary shares to NatWest, giving it 16.66% in PTSB.

The deal includes Ulster Bank’s nearly €7bn performing non-tracker residential mortgage book, approximately €230m performing micro-SME loan book and the asset finance business worth €400m.

Permanent TSB will also take control of Ulster Bank’s 25 branches.

Announced earlier this year, the deal is expected to close in phases between the fourth quarter of 2022 and the first quarter of 2023.

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As per the Transfer of Undertakings regulations, nearly 450 Ulster Bank employees will be entitled to transfer to PTSB.

NatWest Group CEO Alison Rose said: “Today’s announcement is a key milestone in our phased withdrawal from the Republic of Ireland. Our priority is to support our customers and colleagues through this transition and work closely with Permanent TSB to ensure the successful completion of this agreement.”

PTSB stated that the deal will increase its mortgage book by approximately 40% and its branch network by nearly 30%.

Permanent TSB chief executive Eamonn Crowley said: “It will give us much greater scale and business model diversification, along with, many more customers and branches to fuel our ambition to grow and build a sustainable organisation for the future.

“Reaching a binding agreement is a significant step forward and supports our strategy of growing organically while embracing this once in a generation opportunity to fast-track the growth of Permanent TSB.”