The Irish competition watchdog has cleared the acquisition of Ulster Bank’s linked and tracker mortgage portfolio by Allied Irish Banks (AIB).

According to the initial announcement, AIB has agreed to pay around €5.4bn for Ulster Bank’s mortgage assets valued at around €5.7bn.

The portfolio, which consists of 47,000 clients, is expected to generate total revenue of around €90 million and incur an average annualized service cost of 30 basis points.

In approving the deal, the Competition and Consumer Protection Commission (JPAC) said: “After an extended Phase 1 investigation, JPAC has determined that the proposed acquisition will not materially lessen competition for goods or services in the State and therefore, the proposed acquisition may be made effective.”

AIB Group Chief Executive Colin Hunt said: “We set our new medium-term goals in December 2022 and, as the year begins, we continue to make progress in executing our strategy. Receiving approval from CCPC is another important milestone in the group’s transformation and follows the acquisition of Ulster Bank’s corporate and commercial loans which are in the process of being migrated to AIB Group.

“We look forward to welcoming these new Ulster Bank clients, as well as many more new clients that we are pleased to welcome to the group as the Irish banking landscape evolves.”

AIB expects to complete the transaction and customer migration by the first half of 2023.

The sale is a component of Ulster Bank’s planned exit from the Republic of Ireland, which NatWest announced in February 2021.