Bank of Ireland made the first move in talks to purchase KBCs loans and liabilities.

It emerged this morning that KBC is now aiming to leave the Irish market and hopes to sell “substantially all” of its performing portfolio to Bank of Ireland.

The two banks have signed a memorandum of understanding; however, they will have to obtain regulatory approval for the deal to go ahead.

It is understood Bank of Ireland learned late last year that KBC may be reviewing its Irish operations and approached it with an offer in February of this year.

However, this morning’s announcement came as a shock to many, with little previous indication KBC was looking to sell.

John O'Connell, General Secretary of the Financial Services Union, told Newstalk that 1,200 employees could be impacted if the deal goes ahead.

“They need to know with some degree of certainty what is occurring, what time frames are involved and what is contained in the memorandum of understanding that impacts directly on the,” he said.

Meanwhile, customers of KBC are being urged not to panic, as it could take years for the bank to leave.

Bonkers.ie spokesperson said Daragh Cassidy is not going to “disappear overnight.”

“We are not going to see KBC disappear overnight,” he said. “They have been for 40 years, they have branch networks or hubs around the country, they have a lot of customers and these winddowns can take a huge amount of time.”

The Finance Minister Paschal Donohoe has admitted the move would “alter the competitive landscape” of the Irish banking sector, but insisted customers will still have plenty of choice.

KBC's non-performing loan book is not part of negotiations.