Friday 20 October 2017

AIB 'missed out on €1bn' with speedy sale of stake in Polish bank

Thomas Molloy

Thomas Molloy

THE cost of Allied Irish Banks' hasty sale of its foreign operations was thrown into relief when a stake in Polish lender Bank Zachodni was sold yesterday.

Belgian bank KBC and Spanish lender Santander raised the equivalent of €1.16bn from the sale of a 21.4pc stake in Bank Zachodni, which was once majority owned by AIB.

Yesterday's deal values the Polish bank at just under €5.5bn. AIB sold a 70pc shareholding in the bank to Santander for €2.94bn in 2010 in a deal that valued Zachodni at €4.2bn. The transaction implies that AIB would have made around €1bn more if it had sold the 70pc stake today.

AIB was forced to sell its assets by the Central Bank and the troika, who wanted the broken bank to pull back operations and focus on core activities.

Acquired

AIB acquired 80pc of Bank Zachodni in 1999 and merged it with wealth unit WBK two years later to create Bank Zachodni WBK.

Santander, which completed Zachodni's merger with KBC's this year, was under pressure from Polish regulators to boost the proportion of Zachodni shares that are available to other investors.

Yesterday's price for the 21.4pc stake in Bank Zachodni was depressed by the problems in Cyprus, which forced KBC and Santander to sell the shares for less than their market price.

"The discount to the market price is higher than we had expected as sentiment worsened after Cyprus," said Marcin Materna, an analyst at Bank Millennium in Warsaw.

Warsaw's benchmark WIG20 Index has slumped 4.3pc this week, heading for the steepest drop since May.

Santander sold 5.2pc of Zachodni, cutting its stake to 70pc, while KBC, Belgium's biggest bank and insurer by market value, sold its entire 16.2pc holding.

Irish Independent

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