AIB fire-sale plan boosts shares in Polish division
SHARES in the Polish bank majority owned by Allied Irish Banks soared in Warsaw yesterday after the Dublin-based bank said it would sell its Polish, US and UK divisions in a fire sale aimed at staving off partial nationalisation.
AIB has won a month's grace to arrange the sale of a string of assets, including its 70pc stake in Poland's Bank Zachodni, a 23pc stake in US regional lender M&T and the bank's operations in Britain and Northern Ireland.
"The group needs to raise €7.4bn in equity capital by the year end," NCB Stockbrokers analyst Ciaran Callaghan said yesterday.
"This is materially worse than we expected and will force it to sell all foreign assets."
Mr Callaghan calculates that AIB could generate around €4.1bn by selling the Polish unit for €2.1bn and the UK and US units for a further €1bn each.
"However, this is highly dependent on willing buyers emerging from the woodwork," he noted.
Shares in Bank Zachodni, the jewel in AIB's crown, jumped to a two-year high after AIB said it would try to sell its stake. Chief executive Mateusz Morawiecki said there were many investors interested in buying his bank outside Poland.
Banks such as Paris-based Societe Generale, BNP Paribas and London-based HSBC Holdings may be interested in buying the stake, analysts wrote yesterday.
Spain's Santander, Germany's Deutsche Bank, Holland's Rabobank and Poland's Bank Pekao may also be interested in the lender, Warsaw-based Deutsche Bank analyst Marcin Jablczynski added. Canadian lenders are also said to be monitoring AIB's break-up.
"There are many banks that will be interested and those that are already present in Poland may theoretically pay more as they could benefit from synergies," said Marcin Materna, an analyst at Warsaw-based Bank Millennium.
Reports in Britain earlier this week said Santander, Spain's largest bank, was in talks to buy AIB's interests in Britain and Northern Ireland which includes a network of about 40 branches under the First Trust brand as well as a large retail and commercial loan book.
Analysts valued AIB's interests in the UK at around €1.1bn yesterday.
Santander is one of Britain's biggest banks, after buying Abbey, Alliance & Leicester and the savings business of Bradford & Bingley, but is seeking to expand its presence in business banking.
The Spanish bank is also trying to buy a network of 300 branches being sold by Royal Bank of Scotland, which is focused mostly on small-business customers.
No buyers were mooted for AIB's 23pc stake in M&T, although analyst Rick Weiss, from US-based Janney, noted yesterday that M&T has the right to veto any potential buyer.
Legendary investor Warren Buffet is the biggest outside investor in M&T after AIB. (Additional reporting Bloomberg)