Allied Irish Banks raises 1bn in bond exchange and considers disposals

ALLIED Irish Banks (AIB) has raised &euro;1bn (&pound;848m) of capital by exchanging bonds worth &euro;2.4bn for a new issue of &euro;1.3bn, the lender said yesterday.<br /><br />&ldquo;The securities will be exchanged for between 50 per cent and 67 per cent of their face value in line with the previously announced exchange prices,&rdquo; AIB said in a statement, adding that it expected equity accretion of &euro;1bn.<br /><br />The bank had previously warned that it needed to raise an additional &euro;1.5bn in capital on top of a &euro;3.5bn injection of state aid, due to its exposure to toxic property loans.<br /><br />The mooted sale of its stake in US bank M&amp;T Bank Corp would net the bank an estimated &euro;300m, leaving AIB just &euro;200m short of its target, said Ciaran Callaghan, analyst at NCB Stockbrokers.<br /><br />AIB will also participate in Ireland&rsquo;s National Asset Management Agency (Nama), a &ldquo;bad bank&rdquo; set up as a dumping ground for around &euro;90bn of risky loans held by Irish banks.<br /><br />AIB might have to write down &euro;6bn on an estimated &euro;30bn of assets that it will hand over to Nama at a discount, said Scott Rankin, analyst at brokerage Davy.<br /><br />Such a writedown would knock the bank&rsquo;s core equity ratio so low that even after disposing of assets, it could fall below the level required by regulators, Rankin said.