AIB denies plans for sale of Polish bank in bid to ease its financial woes
Allied Irish Banks has assured its 70pc-owned Polish unit it will not be sold as part of the group's plans to shore up its capital reserves in the face of mounting bad-debt losses.
Bank Zachodni WBK, based in Wroclaw in western Poland, yesterday denied a report in local newspaper that the stake would be sold "soon".
AIB's stake in the bank is currently worth about €1bn.
"Any reports suggesting that BZ BWK is for sale is based on unfounded market speculation," a spokesman for AIB said yesterday.
His counterpart in BZ WBK said: "We have our owner's assurances that we won't be sold."
AIB's stake in the Polish bank, valued at about €1.1bn, is currently worth more than double the market capitalisation of the Irish group.
NCB Stockbrokers estimates that a sale of the business would boost AIB's core tier one ratio -- a key measure of a lender's financial stability -- by about 0.5 percentage points.
However, the loss of BZ WBK's earnings' contribution would shave 0.15 points off this amount, it said.
Meanwhile, Goodbody Stockbrokers analyst Eamonn Hughes said that the market is now attributing a value of less than €1.5bn to AIB, when its publicly-quoted interest in BZ WBK, US lender M&T and Bulgarian-American Credit Bank are stripped out.
Shares in AIB rallied 26.6pc yesterday to 57c as investor fears eased about the prospect of the Government moving to partly nationalise the group and its main rival, Bank of Ireland. AIB's stock had lost 76pc of its value over the previous three trading sessions.
Meanwhile, the Irish Bank Officials Association (IBOA), welcomed the Government's insistence in recent days that it has no intention of nationalising both banks.
"The (Finance) Minister's statement has brought clarity to what was becoming an increasingly volatile situation as a result of intense speculation over the Government's intentions for AIB and Bank of Ireland in the wake of developments at Anglo Irish Bank," said Larry Broderick, general secretary of the IBOA.
"In light of these clarifications, IBOA believes that is now essential for the senior management in each institution to engage with representatives of staff and of the Government to plan their future direction."
- Joe Brennan
