Irish union lobbies against 'fire sales'
Issued : 8 April 2010
Financial Times
The Irish Bank Officials' Association, Ireland's largest financial services union, is writing to all Westminster MPs in Northern Ireland and MLAs in the Stormont assembly to oppose plans for what the union claims will be "fire sales" by Allied Irish Banks of operations in Northern Ireland and Britain.
The union hopes to win the support of politicians during the Westminster election campaign to oppose AIB's plans to sell almost all of its units outside the Republic of Ireland, including First Trust, the third-largest retail lender in Northern Ireland, and London-based AIB GB, a business lending bank.
The unions claim that the sale of First Trust, which employs 1,500 people, would result in lost jobs and would damage the Northern Ireland economy by curtailing lending.
AIB, Ireland's largest bank, said last week it planned to sell its UK operations, which include First Trust, and most other banking assets it holds outside the Republic, including a 70 per cent stake in BZWBK in Poland and a 22.5 per cent shareholding in M&T Bank in the US.
AIB said it had appointed AIB Corporate Finance and Morgan Stanley to advise on the sales in Poland and the US.
The bank is seeking to raise capital to plug the holes left when it completes the transfer of about €22bn (£19.3bn) in toxic commercial property loans to Dublin's bad bank, the National Asset Management Agency. It also needs to raise more capital to meet higher-than-expected capital reserves for so-called 'worst-case' losses in the future.
Matthew Elderfield, Dublin's financial regulator, in setting the capital requirements for five Dublin lenders, said last week that AIB had to raise €7.4bn by the end of the year for the bank to reach its target 7 per cent core tier one equity capital ratio. AIB said that apart from asset sales it also planned to sell shares to "private shareholders".
But Larry Broderick, IBOA general secretary, said the union believed that AIB should be stopped from selling its banking operations at "fire-sale prices". Mr Broderick said the banking operations outside the Republic could in time help restore AIB to profitability and appeal to equity investors who, he said, would otherwise be dissuaded from investing in "a rump" banking group.
The union is seeking to meet MLAs of the Northern Ireland Assembly to discuss what it says are "the significant consequences" for financial services in Northern Ireland from the operations of Nama in the Republic.
"Our members throughout Northern Ireland - but especially in First Trust Bank - are naturally concerned about the potential impact of these unprecedented developments for their livelihoods and also for the wider economy of Northern Ireland," the IBOA letter says.
by Eamon Quinn in Dublin
