Allied Irish Banks, the lender being taken into Government control, may sell its $2.2bn stake in US lender M&T Bank to institutional investors after talks to sell the holding to Santander broke down, a person familiar with the talks said.
The bank may offer the 22.4pc stake in a placing within weeks, said the person, who declined to be identified because the talks are private. Ronan Sheridan, a spokesman for AIB, declined to comment.
Santander had been in talks to merge Sovereign, its US division, with M&T, people briefed on the situation said on September 21.
The Spanish lender would have acquired AIB’s stake in M&T as part of the transaction, the people said. Those talks broke down, a person with knowledge of the matter said on September 27.
The Government said today it will take majority ownership of AIB in its second bailout of the lender.
Finance Minister Brian Lenihan said the bank will seek to raise €5.4bn in a November stock sale.
The National Pensions Reserve Fund Commission, which is guaranteeing the sale, may buy as much as €3.7bn of stock and convert €1.7bn of preference stock.
The Government said today the cost of rescuing the country’s lenders may jump to as much as €50bn.
The rising cost of the bailouts prompted Standard & Poor’s to downgrade Ireland’s credit rating last month and has pushed up the country’s borrowing costs.