The competition watchdog has approved the €7.6bn plan by Permanent TSB to acquire a huge chunk of the mortgage loan book and 25 branches from Ulster Bank, the last of a trio of banking deals that will change the landscape of Irish banking forever.
Friday’s decision by the Competition and Consumer Protection Commission, or CCPC, all but completes the regulatory hurdles for the dominant players AIB, Bank of Ireland, and Permanent TSB to carve out the loan books from their major rivals, Ulster Bank and KBC Bank, which are closing their doors in the Republic.
The deals mark the biggest shake up in Irish banking for household and business customers since the hugely expensive banking bailouts were forced on the State to save the banking system from collapse over a decade ago.
Apart from the dominant banks, everybody has come to accept that the scramble for the Ulster and KBC loan books is bad news for competition and bad news for Irish households and small businesses, who already pay among the highest rates for the most expensive loans in Europe.
Following in-depth probes, the CCPC had approved, in May, the plan by Bank of Ireland to secure €9bn mortgage loans from KBC, and in April, the plan of AIB to acquire €3.7bn in commercial loans from Ulster.
There will likely be a fourth deal that will require a watchdog investigation subsequently after AIB doubled down to propose also to secure €6bn in tracker loans from Ulster Bank.
That proposition has yet to be forwarded to the regulator.
However, running through the Permanent TSB ruling on Friday and the two earlier decisions is the acknowledgment that the watchdog had little choice but to approve the deals, even as it said that competition would be harmed.
Ronan Dunne, head of competition and EU law at Philip Lee, said the thread running through all three decisions was “the limits” of the conventional power wielded by regulators under circumstances where major companies are withdrawing from a market.
“Its hands were tied,” Mr Dunne said. “Basically it has said there is no other bank prepared to come into the market and it has to be one the existing banks to take on the loans books”, he said.
In terms of Permanent TSB, the CCPC said in its statement it had no influence over plans by any bank to pull out of the market in the Republic, noting it had “previously highlighted its concerns in relation to competition in the banking sector”.
Permanent TSB now also has the green light to get 25 branches from Ulster, including the Wilton branch in Cork, Shannon in Co Clare, and Thurles in Co Tipperary.
Economist Jim Power said the dysfunctional banking market here calls for intervention by the Government to set up a bank akin to the old ACC and ICC.
“I find it increasingly depressing,” Mr Power said of the dire state of competition in banking.
