SHARES IN Allied Irish Banks made strong gains yesterday on foot of an informal investment approach from Canadian Imperial Bank of Commerce (CIBC).
The move is seen in the market as a sign that AIB may be able to avoid nationalisation after its impaired property loans go to the National Asset Management Agency (Nama).
Responding to a report in The Irish Times, AIB confirmed in the afternoon that it has received an investment proposal from a "third party" seeking to take a minority stake in its business.
Sources identified the suitor as CIBC, Canada’s fifth-largest bank. CIBC has also approached the Government, it is understood.
AIB shares rose 6 per cent to close the day at €2.23, trading as high as €2.40 in the morning. Other Irish financial stocks also gained ground, with Bank of Ireland rising 3.5 per cent to just under €2.14 and Irish Life Permanent gaining 5.5 per cent to close just under €3.95.
Little is known of CIBC’s intentions, although certain market participants in Dublin and high-level banking sources outside AIB believe the institution may have designs on the Irish bank’s 24 per cent stake in US bank MT.
CIBC’s shares were down almost 2 per cent on the Canadian market. Rob McLeod, its chief spokesman, said in an e-mail that the bank never makes any comment on “rumours and market speculation”.
But it is known that the Canadian bank’s approach is conditional on the likely outcome of AIB’s engagement with Nama. AIB’s upfront losses from Nama will be determined by the as yet unpublished pricing scheme for the “bad bank”.
Although this will lead to a requirement for new capital, senior market participants privately think that the possibility of a CIBC investment has lessened AIB’s potential requirement for new State capital.
“Allied Irish Banks notes the recent press comment regarding interest from a third party taking a minority stake in the group and confirms that it has received such interest,” an AIB statement noted.
“However, any discussions with regard to this matter are preliminary and are not expected to progress in the near term, at least until there is greater clarity on Nama among other issues. There can be no certainty that these discussions will lead to a proposal to invest in the group or a transaction being concluded.”
CIBC’s conditional proposal led to Opposition claims that foreign banks were chasing easy profit from Irish banks once Irish taxpayers had foot the bill to clean up their toxic debt.
“Who wouldn’t be interested in buying a cleaned-up bank at rock bottom prices?” said Fine Gael finance spokesman Richard Bruton.
