AIB pays £47.4m for WBK control

ALLIED Irish Bank is raising its stake in the Polish bank WBK to 60.2 per cent at a cost of £47.4 million. The bank is also looking at acquisition opportunities in Hungary and the Czech Republic.

AIB will exercise options over shares held by the European Bank for Reconstruction and Development (EBRD) to raise its WBK stake from 36.3 per cent to 60.2 per cent. The Polish bank will then become an AIB subsidiary.

Through its AIB European Investments subsidiary, AIB is buying EBRD's 23.9 per cent stake in WBE in two stages. The deal must take place in two stages to meet Polish stock exchange rules.

AIB agreed a formula in 1995 for setting a price of the EBRD shares. But it would have had to pay the full market price if the shares were bought in one block.

AIB is paying 13.95 zlotys per share compared with a current market share price of 21 zlotys.

The first block of 6.5 million shares or 9.4 per cent of the issued share capital of WBK was acquired this week for £18.9 million. The second block of about 10 million shares, or 14.5 per cent of WBK, will be bought within about a month for £28.8 million.

Mr David McCrossan, managing director of AIB European Investments, said AIB was working with WBK to develop the bank and its consumer credit and other services.

The cost of increasing its holding in the Polish bank has risen as the hank's financial performance and its stock market performance has improved. WBK reported pretax profits of £46 million for 1996 and had total assets of £1.131 billion. The total cost of the 60.2 per cent holding will be £96.2 million.

AIB Group chief executive, Mr Tom Mulcahy said the decision to raise the its stake in WBK, was based on AIB's satisfaction with the bank's progress since it first invested in 1995.