Friday 28 July 2017

AIB moves closer to off-loading 22pc stake in M&T

Cash will go toward €7.4bn bank must raise by year-end

Siobhan Creaton

AIB IS moving closer to raising more cash from the sale of its assets with expectations that it could announce the disposal of its 22pc stake in the US bank M&T as early as this week.

The bank's stake, which is valued at around €1.2bn, is being eyed up by a number of suitors, although reports suggest that talks between AIB and the front-runner, Spanish bank Santander, which purchased AIB's Polish operations last month, broke down at the weekend.

The discussions are said to have fallen apart over a disagreement about who would control the combination of Santander's Sovereign Bank unit and M&T.

The US Federal Reserve recently discussed a proposal that would see Santander eventually acquire a majority stake in M&T, while leaving its senior management with a degree of control.

Other contenders to buy the M&T stake include Canadian bank Toronto Dominion; one of the bank's shareholders; global investor, Warren Buffet; and the Pittsburgh-based PNC Financial Services Group.

Santander paid €3.1bn for AIB's 70pc stake in Bank Zachodni in Poland last month and has previously held talks with M&T about buying this stake.

AIB needs to raise €7.4bn by the end of the year to meet the capital requirements laid down by Ireland's Financial Regulator Matthew Elderfield.

Announced

Last week it announced the sale of its stockbroking arm, Goodbody, to Kerry-based Fexco for €24m. It is also seeking to dispose of its UK operations.

If the bank fails to raise the required cash, the Government would have to take a bigger shareholding in the bank, effectively nationalising it.

The Government has indicated that it is prepared to convert its €3.5bn in preference shares into ordinary AIB shares if it needs to.

AIB could also look to raise money in a rights issue but, with its share price falling and the negative sentiment towards Irish banks, it is unclear whether it will be able to bring in fresh capital by this means in the short term.

Irish Independent

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