The deal was finalised on Friday in the Jersey and Guernsey courts and customers were advised by letter at the weekend.
Neither company will disclose the value of the sale, nor the number of customers affected.
Until now Bristol & West – a subsidiary of the Bank of Ireland – has offered mortgages in Jersey via broker Mortgage Shop Plus.
The company has never been licensed to offer savings and investments in the Island, although it will continue to do so in Guernsey.
Mortgage staff there will be transferred to NatWest, which is part of the Royal Band of Scotland group.
A Bank of Ireland spokesman said the decision to sell the Channel Island mortgage business had come from a strategic decision to focus on the savings and investments market, rather than lending.
NatWest say the acquisition is in keeping with their aim to be the ‘retail bank of choice’ for customers in the islands.
Bristol & West was one of only two building societies offering mortgages in Jersey.
The lending market has historically been limited to fewer than ten lenders, most of which are the high street banks.
In the UK there are over 60 building societies.
The other building society offering products to Jersey consumers is Kent Reliance, which acquired the mortgage business of Standard Chartered Bank for £53 million in 2002 and set up Jersey Home Loans, to service existing customers and arrange new mortgages.
Two years on they believe their presence has made the market more competitive and now offers Jersey residents a wider choice.
But chief executive Rob Procter says he continues to be disappointed that the mutual society is still not allowed to take deposits.
‘We would be able to offer better mortgage products, as well as better interest rates,’ he said.
‘At the moment we have to raise funds from our UK business.
Mr Procter said he had spoken to several Jersey politicians who had promised they would look into the matter, but nothing further had been done.
‘We don’t want to appear as outsiders who know better and we’re not trying to compete with local business because we would be offering something that isn’t here at the moment – Jersey is still like the UK was 200 years ago.
‘We have been to see the Jersey Financial Services Commission but we’ve been told they don’t want the competition here and we get the sense that they don’t want to rock the boat,’ he said.
‘We’re not in the top 500 banks but we’ve been around for 150 years and we’re heavily regulated by the UK’s Financial Services Authority.
In the last three years we’ve won four awards and because we’re a mutual society we don’t have to return the profits to shareholders.
Since January this year the society has lent £67 million to Island homeowners and Mr Procter said it was fully committed to expanding the Jersey business and maybe moving to Guernsey as well.
