AIB is looking to acquire €4 billion worth of Ulster Bank's performing corporate and commercial loans following NatWest's decision to withdraw from the Republic of Ireland.
Ulster Bank has 1.1 million customers here, along with 2,800 staff and 88 branches
Today NatWest said it would begin an "orderly and considered" withdrawal from the market over the coming years and was in talks with a number of parties about different parts of its business.
AIB has confirmed that it has entered into a non-binding "Memorandum of Understanding" with NatWest to buy a €4 billion Ulster Bank portfolio of performing corporate and commercial loans.
AIB also confirmed the transfer of employees to AIB from within Ulster Bank's commercial franchise directly involved in the day to day management of the loan book.
It is understood that between 200 and 300 Ulster Bank staff could transfer to AIB if the sale of the €4 billion Ulster Bank corporate loan book is concluded.
These would primarily be relationship managers who deal with specific clients.
The loan book is made up of around 5,000 customers, ranging in size from medium to large companies and some smaller firms with large turnover.
However, no deal has been reached yet and no price agreed for the portfolio.
It is understood that contacts have been taking place at a very senior level between both banks since reports began to emerge last year that NatWest was conducting a strategic review.
The deal, if it were to go ahead, would represent a significant opportunity for AIB to acquire a large performing corporate loan book.
It will be a slow process though and could take up to nine months to get the deal finalised and to get regulatory approval.
In a statement, AIB said that the potential deal remains subject to customary due diligence, further negotiation and agreement of final terms and definitive documentation, as well as obtaining appropriate internal, corporate and regulatory approvals and other conditions precedent.
"No assurance can be given that the parties will reach a definitive agreement or that the proposed sale will be concluded on acceptable terms, when contemplated, or at all," the bank said.
It added that it will provide an update to the market in due course.
Commenting on today's developments, Goodbody Stockbrokers said that if the deal to buy the €4 billion portfolio goes ahead, it would make AIB the clear market leader in corporate and SME lending in Ireland.
"New business banking rates in Ireland are 3.7% and rates on corporate banking are likely to be lower, but this still implies potential material profit accretion for AIB," the stockbrokers added.
Shares in AIB moved higher in Dublin trade today.