AIB invited to bid for Polish bank

ALLIED Irish Banks has been invited to bid for shares in Weilkopolski Bank Kredytowy (WBK) put on sale by the Polish government. Confirming the invitation, a spokesman said: "We are considering all the implications for AIB."

The Irish bank already has a 16.3 per cent stake in WBK as well an option to acquire the 24 per cent stake held by the European Bank for Reconstruction and Development (EBRD). Yesterday, the Polish government announced a tender for the sale of 13,763,200 shares in Weilkopolski Bank Kredytowy.

The government plans to reduce its 25.1 per cent stake in the bank to about 5 per cent. Potential investors have been invited to bid for shares in blocks of at least 5 per cent by March 11th. The Polish government has already warned that it would not accept "a low offer" for its shares.

Because AIB would own just over 40 per cent of WBK if it exercised its option to acquire the EBRD stake, it has to consider whether to bid for the full block of government shares or for one or more block of 5 per cent.

If AIB acquired the full 20 per cent block, it would own just over 60 per cent of WBK.

With its current shares and options, the Irish bank already considers itself the strategic shareholder in WBK. The Polish ministry considers the acquisition of its stake by AIB could be a "good solution".

"As long as the price is good, it is better to have one strategic investor than two or three with large stakes," according to Mr Miroslav Bojanczky, the deputy head of banking at the finance ministry. The government's two main interests are the price it can realise from the sale and the intended strategy, including the future investment plans, of the potential investors.

AIB paid Pounds 13 million for its 16 per cent stake in WBK. WBK shares were floated at 1.4 zloyts in March 1993. This week the shares were trading at seven zylots (about Pounds 1.60) putting a market value of about Pounds 22 million on the shares the government is offering.

With the government expected to insist on a premium over market price of at least 10 per cent, the stake should raise about Pounds 25 million.

The investment is attractive, to AIB because WBK is operating in a fast growing economy (GDP increased by 6.5 per cent last year where inflation is falling rapidly (to 22.5 percent from 60 percent three years ago).