Bank of Ireland has won European Commission approval to abandon an originally-envisaged sale of its life insurance unit, New Ireland.
Under a new plan, it will:
pull out of British business and corporate banking.
shed its ICS Building Society distribution platform in Ireland.
The sale of New Ireland had been ordered in return for approving state aid to the bank.
The European Commission said the recent sale of Ireland´s largest life insurance company had affected the number of potential buyers for New Ireland, increasing the likelihood of selling it with losses. It also said a divestment would negatively affect BOI´s capital and capacity to return to profitability and would slow down progress towards long term viability.
The revised plan involves the sale or retirement of the ICS Building Society’s distribution platform together with the sale, if required by the acquirer, of up to €1 billion of mortgage assets.
The intermediary channel accounted for an average of 15 per cent of new lending over the past three years.
In Britain, the bank must exit from business banking and corporate banking activities, including the deleveraging of the current businesses, which had gross loan assets of around €4.6 billion at December 2012.
Bank of Ireland said it would attempt to accelerate the deleveraging of these businesses by way of sale.
However it added that it would not have an obligation to sell these businesses at disposal discounts greater than those agreed with the European Commission.
This measure does not impact on British consumer banking businesses.
The New Ireland Group is the second largest life and pension manufacturer in the Republic of Ireland with a new business market share of around 24% as of 31 December 2012, serving some 600,000 customers.
At the end of 2012, the business had a net book value of €816 million and generated operating profit before investment variances and economic assumption changes of €77 million.
.....
