AIB sale of stake in bank delayed

AIB is still expected to conclude a deal on the disposal of its 23% stake in New York-based lender M&T Bank in the near future despite reports suggesting merger talks between M&T and Spanish group Santander have broken down.

Santander, which snapped up AIB’s Polish operations for about €3.1 billion, seemed, up until Sunday, to be closing in on a merger with M&T, via US division Sovereign Bank, which would involve the Spanish group acquiring AIB’s stake for about €1.2bn.

However, weekend reports from the Wall Street Journal and Bloomberg suggested Santander rejected a deal to give it a majority stake in the merged entity but day-to-day control to M&T.

Despite AIB refusing to comment, it has been heavily speculated since June that the bank would place its shares in M&T with institutional investors at a modest discount and still be in the position to raise more than €1bn if its preferred disposal route was closed off. That now appears to be the most likely outcome.

One industry source said either through a private sale or a share placing, AIB will get the deal done. The issue is now the timeframe.

AIB had indicated a sale of M&T might be done by the end of this month.

While that is now unlikely, the bank is still facing an end of December deadline to raise the remainder of its €7.4bn funding target.