AIB detailed stress test figures may be ‘significant blow’ to capital-raising bid

AIB’s detailed stress test figures may be a “significant blow” to the lender’s efforts to raise capital, NCB Stockbrokers said.

The bank’s profit under European stress tests, which it passed last week, includes gains from buying back bonds and earnings from units which are for sale, analyst Ciaran Callaghan said yesterday.

The bank’s core units may be “close to break-even, if not in loss-making territory” under the scenario in European tests, he said.

“This has confirmed our worst suspicions,” said Mr Callaghan who has a ‘hold’ rating on the bank.

“The latest development will come as a significant blow to the group as it attempts to articulate an attractive investment case.”

AIB is selling its British division, Polish unit and a 22.5% stake in US bank M&T Bank Corp.

The bank, which has also said it may sell shares, is trying to raise €7.4 billion to meet new capital standards.

AIB said on July 23 that its income before loan losses would be €901m over two years, under the Committee of European Banking Supervisors’ adverse scenario.

“It is also possible that the CEBS forecast incorporates material restructuring costs for the group as it downsizes,” Mr Callaghan said.

Allied Irish spokesman Ronan Sheridan declined to comment.