The move will reduce the number of retail banks in the country down to just three.
Belgian financial group KBC is planning to leave the Irish market after more than four decades and is in advanced talks to sell its remaining loans and deposits to the Bank of Ireland.
KBC Ireland said that it is reviewing options to divest its non-performing loans.
The bank has €8.9 billion of performing loans and €1.4 billion of impaired loans, mainly mortgages, according to group figures for the end of last year.
KBC currently has a share of about 12.6% of the Irish mortgage market and about 1,260 employees.
KBC Bank Ireland CEO, Peter Roebben, said that customers don’t need to take any action as a result of the announcement.
“KBC Bank Ireland remains committed to offering its quality retail banking and insurance services. For the time being nothing changes, neither for existing nor for new customers. Our customers do not need to take any action as a result of today’s announcement,” he said.
“The Board and the Executive Committee of KBC Bank Ireland are fully conscious of our responsibilities to our customers and colleagues, and the role of KBC as part of the Irish banking system, and we are fully committed to assuming those responsibilities while the talks with Bank of Ireland are ongoing.”
Francesca McDonagh, Group CEO of Bank of Ireland, said the company would be “very pleased to provide KBC Ireland customers with a good home” and “look forward to progressing discussions with KBC over the coming period”.
“When we look at opportunities we consider if they are a good fit for the customers involved and for the bank. This MOU complements our strategy to grow our business in Ireland, and supports the investments we are making in the transformation of our systems and digital banking services,” she added.
Minister for Finance Paschal Donohoe said the situation is a “very significant event for the Irish banking sector, its staff, and customers”.
Speaking on RTÉ’s Morning Ireland, Donohoe said he received a call last night from the chief executives of both banks to inform him of their decision.
“I had become aware, earlier on in the week that there was potential for development in relation to a decision KBC may make, but I was not aware of the scale of what was anticipated or indeed the agreement in relation to the memorandum of understanding between Bank of Ireland and KBC,” he said.
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