AIB close to securing deal to offload US stake

SPECULATION THAT AIB is close to securing a deal to offload its stake in American bank MT by the end of the month intensified yesterday, with some sources suggesting that the bank could net in excess of the expected price for the asset.

Reports yesterday suggested that MT may cede a majority stake in the bank to Santander, by merging with the Spanish bank’s US retail bank, Sovereign.

Sovereign, which has posted pretax losses for the past three years, would come under the management of MT. Such a merger would mean that the new entity would become the ninth-largest savings institution in the US by deposits.

AIB declined to comment on the status of the proposed sale.

Analysts estimate the sale would generate more than €1.1 billion (€820 million) for the bank, based on MT’s share price.

The stock, which has been trading at an average of $85 over the last few months, hit $95 at one stage on Monday before falling back to $91.

If the sale were to exceed estimates, it would have implications for the bank’s planned rights issue and the sale of its UK businesses, analysts said yesterday.

The bank yesterday said that its net interim margin for continuing businesses for the six months to June 20th, 2010 was 155 basis points, excluding the cost of the Eligible Liabilities Guarantee Scheme, and further adjusted to remove Nama loans and incomes.

AIB has to raise €7.4 billion by the end of the year to boost its capital reserves and satisfy the Financial Regulator’s new standards.