Agreement reached on the acquisition of EBS by AIB
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Agreement reached on the acquisition of EBS by AIB
The formation of the first “Pillar” Bank
Allied Irish Bank have recently announced that an agreement has been reached regarding the acquisition of EBS and it is expected that the completed on July 1st. This development follows an announcement by Minister of Finance Michael Noonan that the two institutions will merge and form one “pillar bank” in a restructured Irish banking sector. On completion of the acquisition EBS will operate as a wholly owned subsidiary of Allied Irish Bank called EBS limited.
It is important to note that under this acquisition the following aspects apply:
Ø Every share account in and deposit with EBS Building Society will become a deposit of the same amount with the new entity.
Ø Membership rights will not exist on the accounts held by existing customers of EBS in the new entity.
Chief Executive Fergus Murphy recently stated that “Customers can continue to do business with us as they have always done and can be assured that their deposits remain fully guaranteed under the Deposit Guarantee Scheme and Eligible Liabilities Guarantee Scheme”. Retail deposits continue to be guaranteed under the existing statutory € 100,000 Deposit Guarantee Scheme which covers 100% of retail deposits with all credit institutions authorised in Ireland up to a maximum of € 100,000 per qualifying depositor per institution.
The financial implications of the above acquisition are as follows:
Ø It adds over € 20 billion assets to Allied Irish Bank December year-end total of € 145.2 billion taking the enlarged “ Pillar Bank” total to € 165.3 billion
Ø It adds net loans and deposits of € 16.4 billion and € 9.4 billion and as a result takes the group total to € 102.8 billion and € 61.8 billion respectively, marginally increasing the loan to deposit ratio of 164.8% to 166.4%.
The above implications reinforce the aspect that this acquisition is quite substantial and unprecedenred. Minister for Finance Michael Noonan has stated that the acquisition is an “important milestone in the creation of a reshaped and revitalised banking sector”
John McCarrick
John McCarrick and Associates
11 Dunville Avenue, Rathmines
Dublin 6,Ireland
Telephone:01 4960102
Fax: 01 4973717
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