AIB has announced the merger of its US subsidiary Allfirst with Buffalo-based M&T Bank in a deal worth $3.1 billion.
AIB will receive $886m in cash, along with a 22.5% stake in the enlarged M&T. The bank will use $450m of this to buy back shares. AIB says there will be cost savings of $100m from the deal, with $60m of this expected in 2003.
AIB will nominate four director to the board of the merged entity, while M&T's CEO Bob Wilmers becomes a non-executive director of AIB.
AIB chief executive Michael Buckley described the deal as an ideal opportunity for the bank to reposition and strengthen its involvement in US regional banking.
Allfirst was hit early this year by revelations that one of its foreign exchange traders, John Rusnak, had lost nearly $700m in unauthorised deals.
The deal will make the new M&T one of the largest regional banks in the north-east US, with 700 branches in six states. AIB first acquired Allfirst, then known as First Maryland, in the 1980s.
AIB shares closed €1.02 higher, or almost 9%, at €12.50 in Dublin this evening. They had rallied as much as 16% after today's announcement.
