AIB affiliate M&T surges 5pc on new Santander discussions
US BANK M&T rose the most in two months in New York trading after reports that it restarted discussions about combining with Banco Santander's Sovereign Bank unit.
AIB is currently trying to sell its 22.5pc stake in the US bank.
M&T, whose second-largest shareholder is Warren Buffett's Berkshire Hathaway, climbed $4.28, or 5pc, to $89.73. The shares advanced as much as 8.1pc, the most since June 17.
M&T and Banco Santander, Spain's biggest bank, have contacted regulators, including the Federal Reserve, and are reconsidering a deal after talks stalled in May, the 'Financial Times' reported.
Acquiring Sovereign "makes the most strategic sense" for M&T and could add about $1 per share to earnings, analyst Matthew T Clark of Keefe, Bruyette & Woods said yesterday.
Santander may receive a 35pc minority interest in M&T, Clark wrote.
"M&T would retain majority ownership, gain earnings accretion, eliminate a competitor and add a stronger international partner as a minority owner," Clark said.
M&T spokesman Michael Zabel declined to comment, as did a spokeswoman for Banco Santander.
The banks scheduled a meeting for top executives of the companies over the possible combination, two people with knowledge of the matter said in June.
The executives disagreed over who would control the combined firm -- the issue that led the discussions to break down in May, said the people, who declined to be identified because the matter is private.
Santander acquired 19.8pc of Reading, Pennsylvania- based Sovereign in 2005 and gained full control last year.