AIB said today it has agreed to sell a £600m UK SME loan portfolio to Allica Bank, a UK authorised bank which supports SMEs.

The bank said the sale is part of its previously announced Strategic Transformation Programme.

AIB said the proceeds of the sale will be used for general corporate purposes and it is expected to be marginally accretive to capital.

The UK loan portfolio incurred a loss before tax of about £9m last year.

AIB said that subject to approvals, migration of the loans will be on a phased basis with the process expected to commence in 2021 and complete during 2022.

Following the exit from the UK SME sector, the bank said it will focus on growing its Corporate Banking business in the UK to companies in its chosen segments, including renewables, infrastructure, real estate, healthcare and manufacturing sectors.

AIB said today's deal will reduce both its staff numbers and property footprint in the UK and will result in about €35m in cost savings.

The bank said this marks another "significant step" in the implementation of AIB Group's strategy and its commitment to reduce costs by €230m by 2023.