Irish government buys stake in M&T’s partner, Allied Irish
Bank of Ireland PLC and Allied Irish Banks PLC rose in Dublin trading after the government said it will inject 2 billion euros ($2.8 billion) into each of them to protect the Irish financial- services industry from collapse.
Bank of Ireland climbed 32 percent, the most in seven weeks, while Allied Irish rose 1.2 percent after the announcement late Sunday.
Allied Irish owns 24.25 percent of Buffalo-based M&T Bank Corp., and has been its largest shareholder since M&T’s 2003 purchase of Allfirst Financial, the former Allied Irish subsidiary in Baltimore.
Ireland, the first country in Europe to guarantee all bank deposits, is being forced to use public money after initially urging lenders to seek support from private investors.
Bank of Ireland and Allied Irish will give the state preference shares that pay an 8 percent annual dividend and 25 percent of the voting rights on issues such as change of control and capital structure. The preference shares are ‘perpetual’ and won’t convert into ordinary shares.
The state is also prepared to underwrite a further issue of as much as 1 billion euros in shares by both Allied Irish and Bank of Ireland. The finance ministry has a ’substantial pool’ of additional capital available, and said it is also encouraging banks to seek private money.
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