Wednesday 13 December 2017

AIB faces tough sale on UK assets

Joe Brennan

A move by Spanish bank Santander to shave 10pc off its final bid to scoop 318 branches being sold by Royal Bank of Scotland bodes badly for Allied Irish Banks' sale of its UK division, according to analysts.

However, AIB shares were in demand for much of yesterday's session as bid speculation surrounding its Polish division Bank Zachodni WBK went into overdrive. Santander is poised to acquire the branch network being sold by RBS, being the only bidder in the final round of the sale, which closed yesterday.

The Madrid-listed financial giant, which has bought Abbey National, Alliance & Leicester and Bradford & Bingley in the past six years, used its improved bargaining position in the RBS auction to cut 10pc off its original £2bn (€2.5bn) offer.

"The lack of credible buyers for RBS's branch network highlights the challenge facing AIB as it attempts to offload its UK division by the end of the year," said Ciaran Callaghan, an analyst with NCB Stockbrokers.

AIB has put the UK outfit, comprising its business banking operations and its Northern Irish retail bank First Trust, as well as its Polish unit and 22.3pc stake in US lender M&T, on the blocks as part of its attempt to raise €7.4bn of capital required by the Financial Regulator.

The closely watched sale of RBS's branch network had seen other leading contenders, Spanish group BBVA, National Australia Bank (NAB), Virgin Money and private equity group Blackrock drop out in recent weeks.

Meanwhile, NAB, which London corporate finance sources had recently highlighted as a possible buyer for AIB's UK business bank, is reportedly on the verge of pulling out of the British market, following its abortive attempt to take over the RBS outlets.

London press reports over the weekend suggest that BBVA is considering a £2bn bid for NAB's Clydesdale and Yorkshire banks and to use it as a base to catch up with arch-rival Santander on the UK acquisitions trail.

Separately, mooted interest in AIB's 70.2pc-owned Polish arm Zachodni has increased ahead of the close of first-round bids for the business at the end of the month.

The chief executive of Italy's Intesa SanPaolo, Corrado Passera, has confirmed he is "looking at" Zachodni. Alicja Kornasiewicz, head of Poland's second-largest lender, Bank Pekao, said yesterday he couldn't rule out submitting an offer for his smaller rival.

"The Polish government and regulator are determined to have Polish institutions buy BZ WBK," an unnamed government official told Reuters."For now, various scenarios are being analysed." Shares in AIB sold off late in the session, to close down 3pc at 93c.

Irish Independent

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