Wednesday 13 December 2017

Director's share sale means AIB unlikely to sell M&T

Joe Brennan

HOPES that Allied Irish Banks is on the cusp of selling its stake in M&T Bank have been dealt a blow by news that the US bank's top board member has sold almost $4m worth of stock in the group.

Company insiders cannot sell shares if they are in possession of market-moving information.

M&T vice chairman Robert Sadler has sold 55,000 bank shares within the past week, according to official filings, at $72.42 a piece.

Mr Sadler was given responsibility in 2003 for integrating AIB's former US subsidiary Allfirst into M&T, leaving the Irish group with a 23.5pc stake in the merged group.

Analysts widely anticipate that AIB will either choose or be told by the EU to sell the M&T stake as part of a suite of measures to raise billions or euro of equity over the coming months.

The group is looking to shore up its balance sheet as it prepares to absorb an estimated €7.2bn discount on €24bn-worth of loans bound for the National Asset Management Agency. The European Commission is currently reviewing restructuring plans filed by AIB, Bank of Ireland and Anglo Irish Bank on foot of their combined €11bn recapitalisations last year.

"The Sadler share sales clearly tells us that M&T is not aware of a (stake sale) coming down the tracks," said a senior Dublin stockbroker.

Under the merger agreement between Allfirst and M&T, AIB has two options to offload its 23.5pc holding. If AIB plans to sell the stock to one party it must give M&T management the right of first refusal, which is valid for 20 days.


But AIB does not have to get M&T approval if it arranges to sell its shares to a number of investors and where no party ends up with more than 2pc of the stock. Still, AIB, where Colm Doherty was installed late last year as group managing director, has benefited hugely by continuing to hold on to the M&T stake over the past year despite intense pressure from market participants to flog it.

Merrion Capital analyst Sebastian Orsi estimates that AIB could release $800m of capital by selling now, with the value having risen significantly in recent months on the back of a surge in M&T's shares and a weakening euro exchange rate against the dollar.

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