Canadian bank makes surprise approach for stake in AIB

www.irishtimes.com

A MAJOR Canadian bank has proposed to take a stake in Allied Irish Banks. The investment would take place only after AIB’s development loans move to Nama, the National Asset Management Agency.

The conditional approach to the Government and AIB from the Canadian bank was received about a fortnight ago.

The name of the bank could not be confirmed last night but it is understood to rank among that country’s top five lenders.

The proposal is considered to be serious, although it is unlikely to develop in the immediate term given that it is predicated on the outcome of AIB’s engagement with Nama.

“It’s a much longer-term thing. I don’t think they’re going to be moving quickly until they see the full extent of Nama. They want to take an equity interest. We deem this to be of a lot higher standard than other approaches,” a source said.

The source added that the outcome of Nama’s involvement with other financial institutions and any capital-raising exercise they attempt may be a further consideration for the Canadian bank as it examines a possible AIB investment.

Nama is being established by the Government to take over toxic development loans to developers.

Canada is the only state in the Group of Seven largest industrialised countries not to support its banks with guarantees, recapitalisations or the purchases of toxic assets. Among other factors, this has been attributed to stronger regulation, strict capital requirements, fiscal conservatism and the absence of tax-deductible mortgages. Read full article…

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