AIB has said it has reached an agreement to form a joint venture with Canada Life, a subsidiary of Great-West Lifeco, to offer customers a range of life protection, pensions, savings and investment options.

AIB said the business' operations will be conducted through a joint venture vehicle owned 50% by AIB and 50% by Canada Life.

The bank said it expects to invest €90 million, and said it chose Canada Life given its "broad expertise".

Canada Life has experience in the Irish market through Irish Life, a subsidiary of Great-West Lifeco.

"Today’s announcement marks another key milestone in the delivery of AIB’s strategy to enhance and diversify our revenue, to become a full provider of financial services for our customers and to build long- term, sustainable profits for our shareholders," said Colin Hunt, Chief Executive Officer of AIB.

"This deal moves AIB beyond a distributor model to create a strong strategic alliance that marries the product and services expertise of Great-West Lifeco with AIB’s market-leading customer franchise, technology and distribution," he added.

AIB currently operates under a tied agency distribution agreement with Irish Life.

It said it will enter into a new distribution agreement with the new joint venture company, with the existing agreement to remain in place until the launch of the joint venture.

AIB said it expects the joint venture to deliver a "meaningful financial contribution" in the medium to long term.

It is understood that this should be multiples of the €20 million a year in commission income from the previous arrangement.

Declan Bolger, Head of Great-West Lifeco’s operations in Ireland, said they are delighted to be "deepening" their strategic partnership with AIB.

"It is an excellent strategic fit for Great-West Lifeco and aligns with our long- term plans for diversified growth in the Irish market," he said.

"We are excited by the opportunity to create a new venture serving the needs of AIB’s customers and leveraging the strengths of our group to provide innovative life, pension and investment solutions," he added.

AIB said it expects the joint venture to be launched in the second half of next year, subject to approval from the regulatory bodies.