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Allied Irish Banks (AIB) has agreed a deal with Ulster Bank to buy about €4.2bn (£3.6bn) of its performing corporate and commercial loans in the Republic of Ireland.

The agreement on Monday is further to a memorandum of understanding announced in February.

It also follows a period of due diligence on the loan book.

The deal comes after Ulster Bank's owner NatWest said it would withdraw from the Irish market.

The transaction remains subject to customary regulatory approvals.

AIB said the exact size of the portfolio and consideration payable will depend on movements in the portfolio up to completion.

It intends to migrate the loan book on a phased basis over a period of 12 to 18 months.

The bank said about 280 Ulster Bank workers, who are directly involved in the servicing of the loan book will transfer to AIB.

The final number of roles will be confirmed as the deal completes.

AIB said the deal is expected to be accretive to earnings in 2023.

AIB's chief executive Colin Hunt described the deal as a "landmark" that will allow the bank to progress its plans to grow.

"The acquisition of Ulster Bank's €4.2bn corporate and commercial loan book will further underpin the bank's ambitious growth plans and position us to support the business community and Ireland's economic recovery as we emerge from the pandemic," he said.

"We continue to deliver on the strategy we announced last December to enhance and diversify our revenue streams and ensure AIB's long-term sustainability.

"We look forward to welcoming new colleagues from Ulster Bank and working with our new customers as they transition to AIB."