Permanent TSB has agreed to buy €650m of deposits held with Northern Rock's 17,000 Irish customers. The UK bank has operated a phone and online savings business in Ireland since 1999.
The bank says the deal is expected to be completed by the end of this year, subject to approval by Finance Minister Michael Noonan. No details of the price were given.
In February, Permanent TSB took on €3.6 billion of deposits from Irish Nationwide Building Society. Permanent TSB is part of Irish Life & Permanent, which has effectively been nationalised as it needed €4 billion of capital.
'This is a very significant transaction for Permanent TSB bank and is an important strategic step for the bank as deposits are critical for all Irish banks,' said its chief executive David Guinane.
The bank has been a fierce competitor in Irish banks' search for new deposits, attracting €2.6 billion in deposits in the past 12 months ago after offering savers interest up front.
Permanent TSB has been hit by its high proportion of costly tracker mortgages and its inability to access wholesale funding markets.
Question marks surround its future but the Irish Independent reported today that the bank has told the European Commission that it is on track to turn a profit by 2014.
Permanent TSB said all terms and conditions for Northern Rock's Irish customers would remain the same, and all the deposits would come under the Irish guarantee schemes when they were transferred.
Northern Rock was fully nationalised three years ago after nearly collapsing during the credit crunch. British Finance Minister George Osborne said in June that he aimed to find a buyer for it this year.
