Wednesday 26 July 2017

AIB's €3.1bn sale being probed by Polish regulator

Reports in Poland last night confirmed that regulator KNF was investigating the deal which will see Santander take control of Poland's third biggest bank, Bank Zachodni. Photo: Bloomberg News
Reports in Poland last night confirmed that regulator KNF was investigating the deal which will see Santander take control of Poland's third biggest bank, Bank Zachodni. Photo: Bloomberg News
Laura Noonan

Laura Noonan

AIB's €3.1bn sale of its Polish assets to Banco Santander is being probed by the Polish financial regulator and may be referred to the European Commission amid allegations the sales process breached market rules.

Reports in Poland last night confirmed that regulator KNF was investigating the deal which will see Santander take control of Poland's third biggest bank, Bank Zachodni.

Polish peer PKO, an under-bidder for AIB's 70pc stake in Zachodni, is also considering referring the Santander deal to the European Commission, sources revealed last night.

"AIB has not been informed . . . of any intention to investigate the sale," a spokesman said last night. "Should such an investigation take place, then AIB would be happy to co-operate fully."

Demands for an investigation come amid concerns that Santander may have learned confidential information about Zachodni's performance, triggering a higher bid from the Spanish bank.

"There have been some concerns," KNF spokeswoman Marta Chmielewska-Raclawska told wire services. "So, as is normally the case, we will check whether confidential information, such as result forecasts, was not revealed to potential buyers as part of the negotiations."

Majority

Sources close to PKO last night insisted the bank, which is under the majority ownership of the Polish state, had not made the complaints to KNF.

"We haven't done anything yet, but we are not evaluating whether we will take some action," a source said. Any action is likely to be referred to the European Commission.

PKO expects to make a decision on whether to pursue legal action over the coming days.

In a statement, AIB stressed that the sale process was "conducted in an entirely appropriate manner".

"Any suggestions of irregularity in that process is without foundation," AIB added.

The Colm Doherty-led bank is expected to vigorously defend any legal action. The Zachodni sale marked the first step in AIB's bid to improve its capital base by €7.4bn before December 31 to meet targets set by the Financial Regulator here.

While sources in Poland suggest any probe could delay the Zachodni sale, AIB has repeatedly stressed that it will get "credit" for any sales agreed by December 31 even if they have not yet been executed.

The fracas around Zachodni's sale process came as shares in the Polish bank surged the most in more than 15 months, reflecting the better-than expected-price achieved by AIB and Santander's stated committment to make an offer for the remaining Zachodni shares.

Also on the market are AIB's 22pc stake in US bank M&T, which could generate a €1.2bn capital boost; the bank's UK operations, which could improve capital by €1.1bn; and the stockbroking arm Goodbody's, which is being bought by Fexco for about €25m.

Irish Independent

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