Market volatility may hit AIB plan

AIB has refused to comment on its progress in meeting capital-raising requirements, despite mounting speculation regarding its Polish operations and concerns over the possibility of state ownership.

At €7.5 billion, the country’s biggest bank has the largest post-NAMA/capital ratio end-of-year fundraising target.

It has already stated that it plans to meet this requirement by selling its 70% stake in Polish bank Bank Zachodni, its 23% stake in US institution M&T Bank and its British operations, including First Trust Bank in the North. The bank has also pencilled in a rights issue for around September.

Early broker notes yesterday were awash with coverage of a report in the Polish newspaper Gazeta Wyborcza suggesting Poland’s treasury ministry is attempting to establish a local consortium of businesses to mount a bid for AIB’s controlling stake in Bank Zachodni. This consortium is said to include Poland’s largest bank, PKO Bank Polski; and its largest insurance company, PZU, as well as domestic pension and investment funds.

AIB, however, so vocal regarding its positive lending activity to Ireland’s SME sector this week, is refusing to comment on any activity in Poland or any other aspect of its capital-raising initiative.

The bank’s share price fell by nearly 13% earlier this week – it was back up by around 10% yesterday – as concern grew that the overall international volatility in the markets could hamper its efforts to stave off the threat of increased state ownership through its own fundraising moves.

“Current market conditions are clearly not conducive to progressing the group’s capital raising plan, but this was always likely to be a September/fourth quarter event following the European Union’s verdict on its restructuring plan and asset disposals, both anticipated in the coming months,” noted Emer Lang of Davy Stockbrokers.

However, Goodbody analyst Eamonn Hughes countered that investors are likely to want AIB’s disposal programme to be up and running prior to buying into the company.

Meanwhile, the Financial Regulator has fined AIB €40,000 for its breaching of an administrative requirement to regularly update a list made up of people with access to sensitive information relating to a company.