Business Irish

Saturday 16 February 2019

AIB may be target for huge Spanish bank Santander

Cyril Hardiman THE merger and acquisition mania sweeping Europe for months now may be about to visit these shores.

AIB has been named as a possible target for Spain's largest bank, Santander, which the 'Financial Times' reported yesterday was looking for further expansion abroad, especially in Europe. The paper said it was citing sources "familiar with the matter".

AIB's share price immediately perked up 55c, going on to close 30 cent (1.6pc) up at ?19.20 on the speculation which, although still very much a rumour, was not being ruled out by banking analysts yesterday.

A spokesman for AIB said that the group did not comment on market speculation.

The group, this country's largest stock market company with a current capitalisation of close to ?17bn, would be an interesting target given its leading position in the fast-growing Irish economy.

From Santander's standpoint, the Irish group's UK commercial banking operations - which account for just under 20pc of profit - would complement Abbey National, which Santander acquired under two years ago, but which is more heavily engaged in retail banking.

Integrating the two banks would result in a bidder achieving attractive revenue and cost synergies.

AIB's 70pc-owned BZ WBK in Poland is valued at circa ?2bn and could easily be sold. Its 23pc stake in M&T Bank in the North-Eastern United States might prove more attractive for the Spanish bank, reckoned Goodbody banking analyst Eamonn Hughes yesterday, in view of Santander'srecent $2.4bn acquisition of a 20pc stake in Philadelphia's Sovereign Bank. The Spanish group has an option to take over the bank in due course.

The M&T stake is valued at circa $3bn.

According to the 'FT' story, Santander's chairman, Emilio Botin, is looking at a new acquisition in the UK to complement the Abbey National takeover. It suggested the Spaniards had looked at but rejected the idea of buying Alliance & Leicester.

Alliance & Leicester's share price rose sharply last month on rumours of a bid which came to nothing. It has a market value of around £5bn (?7.2bn), about 50pc more than six months ago.

Alliance has also been linked with a £5.8bn (?8.3bn) bid from France's biggest bank, Credit Agricole. The share price fell 8pc last week as bid rumours cooled but was back up 1pc yesterday, buoyed by the Santander story.

The Spanish bank is also being linked to a possible move for Italy's Sanpaolo IMI, in which it already has an 8.5pc stake.

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