Tuesday 28 March 2017

Bank seeks leeway in capital-targets deadline as it finalises assets sales

It has been a difficult time for AIB managing director Colm Doherty since he stepped up to replace Eugene Sheehy late last year as financial markets punished the property-skewed lender
It has been a difficult time for AIB managing director Colm Doherty since he stepped up to replace Eugene Sheehy late last year as financial markets punished the property-skewed lender
Laura Noonan

Laura Noonan

AIB expects to have the sales of its UK, Polish and US interests agreed by September at the latest and is finalising plans for a capital-raising round in the autumn, managing director Colm Doherty said yesterday.

But the embattled bank is hoping the Financial Regulator will be "rational" and not strictly enforce his December 31 deadline for hitting capital targets if there's a "bit of a drag" in AIB's process.

The comments came as the bank moved to quash the market's growing exasperation at the lack of news on AIB's disposals and fundraising plans, which have been in train since March.

The regulator has given the bank until the end of the year to improve its capital position by €7.4bn, with the Government set to fill any shortfall not bridged by the market.

"The fact that we're unable to make an announcement doesn't mean that there's anything untoward about the process," Mr Doherty stressed.

The bank boss said "confidentiality" rules prohibited him from giving as much detail as he'd like, but he outlined the timeline for the three biggest deals.

AIB's UK interests and the bank's 70pc stake in Poland's Bank Zachodni are at the "second phase" of the sales process, with "binding bids" expected "in the next couple of weeks", he said. AIB is hoping to complete both deals "no later than the end of September".

Market sources expressed surprise that the UK process was so advanced, since there has been comparatively little speculation.

AIB yesterday revealed that it had agreed that some €3bn of UK loans that had been ear-marked for the National Asset Management Agency (NAMA) could be sold with the UK business.

Advanced

"That implies that the UK sales process is actually pretty advanced," said one market source.

AIB is also selling its 22pc stake in US bank M&T. Mr Doherty said that sale could be done as a trade sale or a sale on to the stock market with one or the other expected to be completed by the end of September.

Mr Doherty declined to be drawn on the specifics of AIB's other disposals, including Goodbody's and AIBIM, but said all "peripheral" assets were being examined.

Mr Doherty also confirmed AIB had engaged advisers for its capital raising and was working towards a rights issue or share placement "in the fourth quarter of 2010".

The capital raising is likely to be for between €2.5bn and €3bn and will take between six and eight weeks. It won't begin until the asset sales are all agreed, creating a very tight timeline to raise the funds by year end.

It is understood that the Financial Regulator regards the December deadline as firm rather than flexible, though AIB can get credit for any asset sales that have been agreed but not yet executed.

Irish Independent

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