Allied Irish Banks says will sell M&T stake for 2 bln dlrs

7th October 2010, Comments 0 comments

Allied Irish Banks, in deep trouble over bad loans, said on Thursday that it will seek to raise around 1.5 billion euros (2.0 billion dollars) from the sale of its stake in US group M&T Bank Corp.

Allied Irish Banks, which has a 22.4-percent shareholding, said in a statement that it hoped to raise the funds through a public offering of its M&T shares at 77.50 dollars each, subject to shareholder approval.

The crisis-hit Irish bank, which is 19-percent owned by the Irish state after a massive bailout, has been ordered by the government to raise a total of 10.4 billion euros.

"The proposed disposal is also expected to generate approximately 900 million euros of equivalent equity capital," it said in the statement.

"The board of AIB intends to use the equivalent equity capital generated from the proceeds of the proposed disposal to meet part of AIB's revised prudential capital assessment review requirement of 10.4 billion euros.

"The net cash proceeds will be used as an additional source of liquidity to support AIB's business activities."

Allied has already raised about 2.5 billion euros from the sale of its stake in Polish group Bank Zachodni to Santander of Spain, and will launch a 5.4-billion-euro share offering next month.

The embattled lender, which was slammed by the global financial crisis and a vicious recession in Ireland, will likely become majority government-owned after the share offering in November.

"The disposal of M&T shares represents the second significant business disposal," said analyst Emer Lang at Davy Stockbrokers in Dublin.

"News of the disposal followed another volatile day for the banks, and Ireland overall, with Moody's downgrading ratings for a number of subordinated bank bonds and Fitch downgrading Ireland's rating," added Lang.

- Dow Jones Newswires contributed to this report -

© 2010 AFP

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