AIB is snapping up EBS for just €1. The Department of Finance said it would "make little sense" to have a state-owned bank paying cash for a state-owned building society".
inance Minister Michael Noonan confirmed that agreement had been reached on a deal that will formally merge AIB and EBS on July 1.
The deal was first revealed by the Irish Independent on March 31 and confirmed by the Central Bank later that day.
EBS will become a subsidiary of AIB and will "continue to operate as a separate business ... with its own brand", the Department of Finance said yesterday, stressing that customers' accounts in AIB and EBS would stay separate.
Accordingly, the institutions will be treated as separate for the purposes of the Central Bank guarantee scheme, so deposits of up to €100,000 in each institution will be covered.
The clause will be immaterial now, since unlimited deposits are covered by a separate government guarantee scheme.
However, it could become significant when that scheme lapses in three years.
The merger will also see EBS demutualise and acquire its own banking licence. It will take the name 'EBS Ltd'.
In a statement last night, Mr Noonan said: "The new merged entity will be a stronger and more domestically focused institution, which will leave it better placed to service the needs of the Irish economy and will help return the banking system as a whole to long-term viability."