Belfast Telegraph

Saturday 26 July 2014

First Trust’s future uncertain as parent bank AIB sells UK division

The future of Northern Ireland’s third biggest bank was in the balance last night after First Trust parent, Allied Irish Bank (AIB), announced it was selling its UK division to avert nationalisation.

AIB, which has 48 branches in Northern Ireland operating as First Trust, said it had to raise €7.4bn by the end of this year.

To do so, it wants to off-load its UK division comprising of First Trust and 31 AIB branches in other parts of Britain, along with its interests in Polish bank BZWBK and American institution M&T.

The bank announced the sales in a statement to the Irish Stock Exchange on Tuesday, in which it said: “We currently expect the aggregate proceeds from those sales, based on today’s market conditions, to exceed market estimates and meet a substantial part of our overall need for capital.”

A spokesman for the bank said: “We need €7.4bn in our balance sheets by the end of the year to restore the credibility of Irish banks on the international markets so that the cost of funding will come down, and to avoid nationalisation. Unfortunately that means having to find buyers for the divisions which we have spent years building up.”

Economist John Simpson said there was not a long queue of potential buyers drawn from the local banking sector. “The only Northern Ireland bank that could conceivably take an interest in something the size of the First Trust is the Northern Bank parent, Dankse Bank.

“If I was a chief executive or a senior executive in Northern Bank I would already be on the phone to Denmark.” He said First Trust prints its own notes which was a potential attraction.

Mr Simpson added that Canadian lenders could have an interest — while other speculation also named Spanish giant Santander as a future suitor.

A spokesman for the Northern Bank said: “We do not comment on speculation.”

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