MINISTER FOR Finance Michael Noonan has approved the takeover of EBS building society by AIB on the basis that there was no realistic way of preserving its independence.

The acquisition was approved by the Minister using the 2008 legislation that introduced the original bank guarantee.

The legislation allowed the Minister to approve a merger even if there were concerns that it might reduce competition in the market.

Mr Noonan approved the acquisition on the basis of his opinion that the takeover would not substantially lessen competition in the Irish banking market.

“The rationale for this opinion is that there is no realistic alternative which would ensure that competition from EBS would be preserved,” his department said.

The Minister considered the advice of a competition adviser and the views of Central Bank governor Patrick Honohan, as well as the Competition Authority.

“No third-party submissions were received,” said the department, adding that a summary of the competition assessment would be published shortly.

AIB’s acquisition of EBS will be completed on Friday. The former building society will be run as a stand-alone entity within AIB with its own branch network.

The Minister approved the takeover under the Credit Institutions (Financial Support) Act 2008, the emergency law agreed by the government on September 30th, 2008, to stop the run on the banks.

Bank of Ireland and AIB combined with EBS will form the country’s two “pillar” banks under the Government’s restructuring of the banking sector.

Mr Noonan said last week that the two banks, a radically restructured Irish Life and Permanent and the continued operations of Ulster Bank and other foreign-owned banks would “ensure that a competitive environment is maintained in the banking sector”.