AIB is re-considering a quick sale of prized asset Bank Zachodni WBK, the Polish commercial bank in which it holds a 70.5% stake, in favour of either keeping the investment to boost retained earnings or holding out for a premium price to minimise the need for future government capital injections.
According to analysts who have spoken to the bank's senior management, AIB is holding off on proceeding with a disposal, because BZWBK's profits could add more capital to the parent bank through the recession than a sale at a relatively low price. Last year BZWBK returned a €263m profit to AIB. Its market capitalisation is about €1.3bn.
Commenting on the development, Emer Lang of Davy said: "There is a value below which it probably makes more sense to keep what is still a solidly profitably business. Where that price might be is hard to guage, as strategic considerations have a role to play."
AIB has said it needs to raise €1.5bn in fresh capital to absorb mounting losses.