Allfirst sale could be near

Irish parent in talks with Buffalo bank on $3 billion deal

M&T has branches in Md.

Trading scandal cost local bank $691 million

September 26, 2002|By Bill Atkinson | Bill Atkinson,SUN STAFF

Allied Irish Banks PLC is in negotiations to sell Allfirst Financial Inc., its scandal-marred subsidiary, to M&T Bank Corp. of Buffalo, N.Y., according to published reports in Europe.

The deal, which is reportedly valued at $3 billion, could be announced today, according to a source at the Baltimore-based Allfirst.

Catherine Burke, an Allied Irish spokeswoman in Dublin, Ireland, declined to comment on the deal.

"If and when there is an announcement we will contact you," she said.

Under the terms of the deal, Allied Irish would keep a more than 20 percent stake in the combined companies, according to reports.

M&T Bank Corp. has $31 billion in assets and 470 branches in New York, Pennsylvania, Maryland and West Virginia.

A deal with Allfirst would add $17 billion in assets and 250 branches in Maryland, Pennsylvania, Washington, D.C., Northern Virginia and Delaware.

M&T Bank "is a very solid bank," said Richard McCaffery, a bank analyst at Morningstar Inc., a Chicago research firm. "You don't have to worry about them making reckless loans. It is a bank that really pays attention to shareholder value. It is a blocking and tackling kind of bank."

In recent weeks, rumors have intensified that Allied Irish was shopping for a buyer for Allfirst. The weakened banking company has been conducting a "strategic review" of its options.

Allied Irish and Allfirst have struggled to recover since revealing in February that it lost $691.2 million in bad currency trades over five years.

Bank executives have blamed the losses on John M. Rusnak, an Allfirst foreign exchange trader. Rusnak was indicted in June on federal bank fraud charges.

The scandal jolted the company, which launched an internal investigation that found Allfirst's oversight and controls were lax, and that Rusnak's trading wasn't carefully supervised.

Eugene C. Sheehy, an Allied Irish executive, was named chairman of Allfirst in April, replacing Frank P. Bramble, who retired April 30. Susan C. Keating, Allfirst's president and chief executive, stepped down in July.

In May, Allied Irish executives said at the company's annual meeting that it would decide by the end of the year whether to begin a withdrawal from U.S. banking.

A source at Allfirst said Allied CEO Michael Buckley was in Baltimore on Tuesday for a special board meeting and that some employees were told to be at work early today.

"I think a lot of people realize they are going to lose their jobs, including people who have been working on it [the deal]," the source said.

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