The Competition and Consumer Protection Commission (CCPC) is to carry out an in-depth investigation into Permanent TSB's proposed purchase of some of the assets of the departing Ulster Bank.

"Following an extended Phase 1 investigation, the CCPC has determined that a full investigation is required in order to establish if the proposed transaction could lead to a substantial lessening of competition in the State," the CCPC said in a statement.

In December, the two banks formally agreed a legally binding deal which if approved would see NatWest sell Permanent TSB €7.6bn worth of Ulster Bank assets.

The deal includes Ulster Bank's €7 billion performing non-tracker residential mortgage book and its performing SME loan book - worth €230m.

It also includes the entire Lombard Asset Finance loan business - worth €400m - and 25 branches in Ulster Bank's branch network.

450 Ulster Bank employees who are assigned to the businesses that are being acquired, will be entitled to transfer to Permanent TSB under the deal.

Ulster Bank will pay around €6.4bn of cash funded from internal resources and existing funding sources, while as part of the deal, NatWest will also acquire 16.66% of Permanent TSB Group Holdings.

Last month the CCPC approved AIB's proposed purchase of Ulster Bank's €4.2bn performing commercial loan book.

But it also sounded a warning about the impact of Ulster Bank’s departure on wider competition in the banking marketplace.

The CCPC is conducting a separate phase 2 probe into Bank of Ireland’s proposed purchase of the performing mortgages of KBC Bank Ireland, which is also withdrawing from the Irish market.

In a preliminary assessment sent to the two parties in February the CCPC expressed concern that the plans could substantially reduce competition in the mortgage market.