Spanish ready to buy AIB stake

SPANISH bank Banco Santander – Europe’s biggest – is the front runner to buy AIB’s stake in Polish bank Zachodni WBK, in a head-to-head bidding war Poland’s biggest bank PKO BP which could garner €2.5 billion for the troubled Irish bank.

But AIB is also set to lose €181 million in the sell-off of its 49.9% stake in the Bulgarian American Credit Bank. AIB paid €216m for its stake in the bank in mid-2008 and its value has fallen to just €35m. AIB confirmed it was seeking a buyer, but stressed the sale is unconnected to the disposal of its 70% stake in Poland’s Bank Zachodni.

AIB is in a race to sell-off what it has termed non-core assets by the end of the year as it strives to raise €7.4bn to shore up its capital base and avoid the necessity of the Government taking a majority stake in the bank.

However, it is understood that Santander does not want to buy AIB’s stake as a single lot as this would trigger a compulsory offer under Polish law for the entire bank. It is understood that Santander wants AIB to sell-off at a 4% stake in Zachodni to enable it buy a 66% or less stake which would not require an all-out bid. Santander, which is also in talks to buy AIB’s €1.8bn 22.41% stake in US bank M&T, is believed to be prepared to pay a premium to AIB to avoid making an all-out bid for Zachodni.

And it emerged yesterday that private equity groups looking to take a majority stake in the EBS building society are to seek assurances from the Government that it will help bear any future exceptional losses at the building society, The Sunday Times reported.

The state-run group received bids from JC Flowers, Doughty Hanson and Cardinal Asset Management and Irish Life & Permanent as it seeks to shore up its capital base. Citing sources, the newspaper said the private equity firms were seeking downside risk protection clauses. EBS, JC Flowers and Doughty Hanson declined to comment.