Sunday 18 March 2018

M&T resignation sparks AIB share surge

Joe Brennan

Shares in Allied Irish Banks jumped yesterday as the resignation of group managing director Colm Doherty (right) from the board of M&T heightened speculation it is close to disposing its 22.5pc stake in the US regional lender.

However, sources close to AIB said Mr Doherty's term as an M&T director had come to an end and he had chosen to step down as a result of its decision in March to sell off the stake.

The move came as market chatter in Madrid suggested that Spanish banking giant Santander's talks about merging its US subsidiary, Sovereign Bancorp, with M&T had resurfaced.

Negotiations between both sides reportedly reached an advanced stage last month before collapsing over disagreements about control of a combined entity. A deal would have provided AIB with a possible exit for its M&T holding.

AIB rose 3pc yesterday to €1, while M&T's stock was trading 3.5pc higher in New York by the time of the Dublin close. Analysts estimate that a sale of the M&T stake could release in excess of €1bn of capital for AIB as it races to raise €7.4bn to reach new regulatory targets by the year-end.

The planned sale of AIB's Polish unit Bank Zachodni WBK is the key element of the plan, and is expected to raise a further €2.5bn.

Poland's treasury minister Alexsander Grad clearly signalled his preference for a domestic player to win the auction for Zachodni. First round bids are due at the end of this month. "The acquisition by Polish capital would be greatly appreciated," said Mr Grad.

Polish state-controlled PKO Bank and Bank Pekao, a unit of Italy's Unicredit, have already signalled their interest in the sale process. Polish media reports suggest PKO may bid for Zachodni on its own or as part of a broader consortium of government-controlled financial institutions.

Mr Grad said: "I'd be surprised if a bank as large as PKO wouldn't monitor the process."

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business