AIB In Talks To Sell Troubled Allfirst

by Philip Morton, Investors Offshore.com

27 September 2002

Allied Irish Banks confirmed on Thursday that it is in talks with New York-based M&T Bank Corp over 'a possible partnership' involving its troubled US subsidiary, Allfirst.

Allfirst hit the headlines in February of this year, when it was discovered that foreign exchange 'rogue trader', John Rusnak had accrued $691 million worth of damage as a result of flawed trades over a period of several years.

An internal AIB investigation concluded that poor management and financial controls had contributed to the crisis, and Allfirst Chairman, Frank Bramble, and Chief Executive, Susan Keating subsequently resigned, although AIB denied that this was as a result of the Rusnak losses.

However, despite this, AIB was yesterday said to be 'close to a deal' with M&T Bank.

RTE Interactive News reported on Thursday that under the terms of the proposed deal, 'AIB would transfer complete ownership of Baltimore-based Allfirst to M&T in return for a 22.5% stake in M&T. AIB would also receive up to four seats on the New York Bank's board.

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