Irish competition agency clears unconditionally the sale by NatWest/Ulster of certain assets to Permanent TSB

On 21 July 2022, Ireland's Competition and Consumer Protection Commission (CCPC) announced that it has approved unconditionally the proposed acquisition by Permanent TSB plc (PTSB) of certain assets of Ulster Bank Ireland DAC (UBIDAC) (part of NatWest) after a Phase 2 investigation.

On 21 December 2021, the proposed acquisition had been notified to the CCPC under Part 3 of the Competition Act 2002 (2002 Act).

The CCPC is the principal Irish agency which deals with merger control and competition issues. 

The CCPC determines whether there is a "substantial lessening of competition" by virtue of the proposed transaction.

The CCPC described Permanent TSB, the purchaser, as "a provider of retail and small and medium sized enterprises banking in the State, offering a range of banking products such as business and personal current accounts, overdrafts, mortgages, business and personal loans, credit cards and home insurance."

The CCPC described UBIDAC, the seller, as "a full service retail and commercial bank providing a range of financial services in the State" and as "a wholly-owned subsidiary of NatWest Group plc."

The transaction was described by the CCPC as in the "financial and insurance services" sector.  The transaction was specifically in the banking sector.

The context of this transaction was that NatWest had earlier announced (on 19 February 2021) that there would be a phased withdrawal by UBIDAC from the Republic of Ireland.  NatWest was seeking to dispose of some of the assets of UBIDAC and the proposed transaction was one of a number of such transactions.

A non-binding memorandum of understanding between the parties had been announced on 23 July 2021. When making the latter announcement, NatWest described the deal in the following terms: "[t]he proposed perimeter included approximately €7.6bn of gross performing loans as at 31 March 2021, the majority relating to non-tracker mortgages, and 25 branch locations. UBIDAC had total retail, micro-SME and asset finance gross lending of €16.1bn at 31 March 2021. The Transfer of Undertakings (Protection of Employees) principle will apply to colleagues wholly or mainly assigned to the agreed in-scope perimeter and we expect the number of colleagues that will transfer as part of the transaction to be in the range of 400-500."

The review by the CCPC of the proposed transaction involved a Phase 1 and Phase 2 review by the CCPC.

Ultimately, on 21 July 2022, the CCPC approved the transaction unconditionally. The total review time was 213 calendar days. 

The CCPC will publish its full determination on its website no later than 60 working days after the date of the determination and after allowing the parties the opportunity to request that confidential information be removed from the published version. As the determination has not yet been published but when it is published, it will be analysed here.

In the meantime, the CCPC made some interesting and incisive observations when announcing its decision.

First, the CCPC recalled that in "February 2021, Ulster Bank announced its intention to withdraw all of its banking services in the State….Based on a review of the evidence available to it, the CCPC accepted the argument…that Ulster Bank would have exited the State irrespective of whether or not the sale of the Target Assets proceeded. This is an interesting application of the counterfactual that if this transaction had not happened, the seller was going to leave the market in any event.  In that context, the "CCPC considered whether the proposed acquisition would result in a substantial lessening of competition, when compared to the alternative scenario of a sale of Ulster Bank’s mortgage and micro SME lending assets to an alternative purchaser, and found that it would not."  

Secondly, the CCPC made an interesting statement in its media/press release which would be obvious to competition lawyers and economists but it is a useful reminder to others (e.g., journalists and consumers) about the (limited) role of a competition agency: the "CCPC does not have a role in approving or reversing the decision of a company to exit the State and it has previously highlighted its concerns in relation to competition in the banking sector. The CCPC will continue to engage with stakeholders, including the Department of Finance as part of its retail banking review to consider how to ensure the sector is open and competitive for the benefit of everyone."

A&L Goodbody's EU & Competition team comprising of Vincent Power, Anna Marie Curran, Lorna McLoughlin, Richard Hourihan and Damien Ryan, advised NatWest/Ulster Bank on the transaction.

Date published: 27 July 2022