Allied Irish Banks chief Michael Buckley has spent much of the past eight months bogged down in a trading scandal at AIB’s U.S. subsidiary, which has cost the bank an estimated $700 million. But now, after a 36-hour negotiating session, he has unloaded Allfirst Financial to M&T Bank. The stock market applauded: On the news, AIB’s share price shot up 9 percent. “I only had time to celebrate with a Diet Coke when the deal was signed,” an exhausted Buckley said after the marathon bargaining session in New York.
The deal gives AIB $886 million in cash and makes it the biggest shareholder in Buffalo, New Yorkbased M&T; Warren Buffett’s Berkshire Hathaway is the third-largest investor, after M&T’s own managers.
Best of all, the Irish bank maintains its U.S. presence without the headaches of running Allfirst. And they included one severe migraine: Allfirst’s huge loss, discovered in February, allegedly resulted from an employee’s improper foreign exchange trading. Reports of the scandal bashed AIB’s share price and led to several senior Allfirst executives’ departures.
Buckley says negotiations to sell Allfirst actually started in October 2001, well before the scandal came to light. “Nothing changed the fundamentals of the deal,” the AIB boss says. “We were just interrupted for a couple of months.”
