AIB shares surge 10% on US sale rumours

SHARES IN AIB jumped by 10 per cent yesterday on the back of growing speculation that the bank is poised to sell its stake in US-based MT to Spanish bank Santander.

Rumours were “flying around” the market yesterday that AIB has sold its MT stake, which represents almost one-quarter of the US bank, to Santander “at a high price” and that there may be an announcement over the weekend, one Dublin-based broker said.

Another broker cautioned that such talk was still only conjecture, but the share price reacted on the assumption that the process of selling not just its MT stake, but also its UK and Polish units that are also on the block, will start soon.

“The clock is ticking,” he said. He described AIB as “the best play of the day” on the Irish stock market yesterday.

At the opening bell the stock was at €1. It was driven as high as €1.15 during the session, before settling back to €1.11.

According to Eamonn Hughes of Goodbody Stockbrokers, a deal between Santander’s Sovereign Bank and MT appeared to have fallen through a few weeks ago. However “recent Spanish media commentary that the deal is back on, coupled with the resignation of AIB’s managing director [Colm Doherty] as a director earlier this week heightened the MA frenzy,” he said.

On Thursday, MT rose 9 per cent and was the best-performing stock in the SP 500. It nudged ahead again yesterday in early trade. In a note yesterday, stockbrokers NCB estimated that the disposal of AIB’s stake in MT would generate capital accretion of €1.4 billion for the group. “With some type of sale expected imminently, this would kick-start the group’s recapitalisation process as it strives to raise €7.4 billion by year-end in order to satisfy the regulator’s new capital requirements,” it said.

Santander confirmed yesterday it had made an offer for about 300 British branches of Royal Bank of Scotland, continuing an acquisition drive in spite of the regulatory uncertainty facing European banks. – ( Additional reporting – Reuters)