M&T RESIGNATION SPARKS AIB SHARE SURGE - Shares in Allied Irish Banks jumped yesterday as the resignation of group managing director Colm Doherty from the board of M&T heightened speculation it is close to disposing its 22.5% stake in the US regional lender, writes the Irish Independent. However, sources close to AIB said Mr Doherty's term as an M&T director had come to an end and he had chosen to step down as a result of its decision in March to sell off the stake. The move came as market chatter in Madrid suggested that Spanish banking giant Santander's talks about merging its US subsidiary, Sovereign Bancorp, with M&T had resurfaced. Negotiations between both sides reportedly reached an advanced stage last month before collapsing over disagreements about control of a combined entity. A deal would have provided AIB with a possible exit for its M&T holding. AIB rose 3% yesterday to €1, while M&T's stock was trading 3.5% higher in New York by the time of the Dublin close. Analysts estimate that a sale of the M&T stake could release in excess of €1 billion of capital for AIB as it races to raise €7.4 billion to reach new regulatory targets by the year-end. The planned sale of AIB's Polish unit Bank Zachodni WBK is the key element of the plan, and is expected to raise a further €2.5 billion.
STATE INJECTS FURTHER €250m INTO EBS - The Government confirmed yesterday that it has injected a further €250 million into the EBS to ensure the building society meets its capital requirements, says the Irish Times. The further recapitalisation, which is in the form of a promissory note, represents almost a third of the €775 million the Government pledged to the EBS if private investment was not forthcoming. The promissory note follows on from the €100 million cash injection given by the Government last month. The EBS needs €875 million to meet the core equity ratio of 7 per cent set by the Financial Regulator. The further recapitalisation of the EBS by the State came as the building society opened a data room to assist in the due diligence process for interested parties ahead of its July 2nd deadline for prospective offers. The Department of Finance said that "every effort is being made to progress talks on private investment" by the start of July. Meanwhile, Irish Life & Permanent (IL&P), which is seeking to negotiate with the EBS on a possible amalgamation, received a boost yesterday as Deutsche Bank advised investors to buy shares in the company and expressed confidence that IL&P would play a central role in the proposed "third force" in Irish banking.
CITYLINK OUTSOURCES ROUTES IN €30m DEAL - Coach operator Citylink Ireland has outsourced the operation of all of its routes to Claregalway-based Callinan Coaches in a five-year deal worth in excess of €30 million, says the Irish Examiner. No jobs will be lost. All of Citylink's drivers will now work with Callinan Coaches. This contract cements an outsourcing arrangement under which the two companies have been operating for the past six months. Citylink will continue to manage sales and marketing for the routes. Under this deal, Callinan Coaches will run 15 multi-stop and 14 non-stop each way trips daily between Galway and Dublin, five multi-stop runs each way between Galway and Cork, plus regular daily services between Galway and Clifden, and Galway to and from Shannon Airport. Callinan will carry one million passengers a year on 85 daily Citylink routes. Citylink's Singapore-based owners ComfortDelGro, which employs 10,000 people in Britain, Ireland, Singapore, China and Malaysia, insists the move does not dampen its ambitions for the Irish market. Citylink made a marginal profit last year on a turnover of about €6m, while it made a loss of €260,000 on a turnover of €6.2m in 2008.
FOOD PRICES TO RISE BY UP TO 40% OVER NEXT DECADE, UN REPORT WARNS - Food prices are set to rise as much as 40% over the coming decade amid growing demand from emerging markets and for biofuel production, according to a United Nations report which warns of rising hunger and food insecurity. The Guardian says that farm commodity prices have fallen from their record peaks of two years ago but are set to pick up again and are unlikely to drop back to their average levels of the past decade, according to the annual joint report from Paris-based thinktank the OECD and the UN Food and Agriculture Organisation. The forecasts are for wheat and coarse grain prices over the next 10 years to be between 15% and 40% higher in real terms, once adjusted for inflation, than their average levels during the 1997-2006 period, the decade before the price spike of 2007-08. Real prices for vegetable oils are expected to be more than 40% higher and dairy prices are projected to be between 16-45% higher. But rises in livestock prices are expected to be less marked, although world demand for meat is climbing faster than for other farm commodities on the back of rising wealth for some sections of the population in emerging economies.