AIB could place €1bn M&T stake with investors if buyout talks fail

AIB could place its 22.5% stake in US bank M&T with institutional investors if it fails to secure a purchaser.

The news comes as newswire reports said PKO Bank Polski, Poland’s largest lender, placed a preliminary bid for the majority stake in Bank Zachodni WBK that AIB is selling.

Meanwhile, Irish brokers suggest the placing would raise over €1 billion, close to the amount AIB was hoping to make from a sale of its US associate.

Spanish banking giant Santander has been the lead contender to buy the business. It has been reported that its US subsidiary, Sovereign Bancorp, would merge with M&T, taking over AIB’s stake.

If that deal fails, AIB is said to have advanced plans to place its M&T shares at a modest discount to their current share price. Goodbody Stockbrokers said in a note yesterday this would raise over €1bn for AIB.

The bank is also in the process of selling its 70% sake in its Polish bank and its British businesses as part of its €7.4bn capital raising.

Shares in AIB rose almost 2% yesterday to 99 cents.

Elsewhere in Europe, data shows deposits in commercial banks, in the countries hit hardest by the eurozone debt crisis, grew in May, suggesting savers still have confidence in the countries’ banking groups, Reuters reported yesterday.

Deposits at Greek banks rose to €379.7bn in May, up from €373.1bn in April, the highest since records began in March 1998, according to figures released by the European Central Bank.

Deposits in Portugal, Spain and Ireland also increased over the period with Irish deposits rising to €685.3bn in May from €655.3bn in April.

Spanish deposits hit €2.239 trillion from €2.183tn the month before.

In Portugal’s case, deposits rose to €308.9bn from €295bn, topping €300bn for the first time.

Despite that vote of confidence, Bundesbank president Axel Weber told German lawmakers that stress tests may be extended to 100 European banks.

Lawmakers from the parliament’s finance committee met Mr Weber in Frankfurt last Friday, who told them Germany’s banking industry is beginning to stabilise.

There are still some German banks with problems and these will be revealed by testing, he said.

Mr Weber said he’s confident the situation will be “corrected” without resorting to coercion.

It is thought that both the Caja’s (savings banks) in Spain and the Landesbanks in Germany will fall into this wider selection as the ECB moves to shore up confidence in the regions banking system.

This measure will be welcomed globally as the original stress test was not seen to go far enough, with negative comments coming from many quarters, including George Soros.

A source suggested the stress test would include banks with significant market share in each market, Bloomberg reported.

“We presume this will include the majors in Ireland, however, as we know the financial regulator in Ireland has already completed stress test on the system using standards similar to UK and US regulatory bodies.”