Takeover talk sends AIB shares soaring

Shares in AIB bank - whose value slumped earlier this month following confirmation of an €800m alleged fraud loss at an American subsidiary - soared in price on the stock exchange today following renewed takeover speculation.

The company, Ireland’s biggest banking group, has been seen as a potential target because of the huge deficit incurred by the Allfirst Finance Corporation they own in Baltimore, Maryland.

The prospects of a move intensified when weekend reports pointed to the possibility of a bid by the Royal Bank of Scotland.

The Scottish bank already owns the Ulster Bank, which has strong interests in the United States.

At one stage in Dublin the price of AIB shares was up by more than 70 cent today on the level last Friday, when takeover speculation first surfaced.

There was no comment from either company on the takeover talks, but analysts say an RBOS-AIB merger could generate huge savings for an amalgamated unit because of duplicated operations in Ireland, the UK and the US.

Some observers, however, believed it was more likely that the Scottish bank would bid for the Allfirst company.

Three weeks ago AIB bosses in Dublin admitted the multi-million loss, generated by the activities of foreign exchange dealer John Rusnak.

The Irish bank has claimed the money was lost through fraud and highlighted the possibility of collusion. But Mr Rusnak’s lawyers have denied any wrong-doing on his part.

The affair is being investigated by senior American banker Eugene Ludwig, who is due to report back to the AIB board by March 9.