Analysts believe AIB will still require up to €4bn, and not less than €3bn, of new investment from the government and its shareholders to meet its capital target by the end of the year, even after selling overseas assets.
The news comes despite the bank's agreement to sell its Polish business to Spain's Santander for €3.1bn last Friday.
Analysts hailed the disposal of AIB's 70% Bank Zachodni (BZWBK) as "a good sale" for managing director Colm Doherty but sources fear the bank may be able to raise only another €2bn in a rights issue, leaving the state to pick up as much as €2bn in slack by converting its preference shares into ordinary shares. This would effectively nationalise the bank.
Pending sales of AIB's UK business and its 22.4% stake in New York's M&T Bank need to be agreed before the end of the month to give the bank time to go to shareholders with a rights issue. But market sources said the sales may not meet that deadline.
"M&T may go alright, but the UK business will be very difficult to sell," said one senior equity analyst at a Dublin securities firm. "Its book is made up of public private partnership lending, public sector financing and SME loans. It does not transplant easily."
The Financial Regulator has given AIB until 31 December to raise €7.5bn to meet new capital requirements.
The price for AIB's stake in BZWBK came in at €500m more than consensus expectations and a 22% premium to the share's closing price in Poland last Friday. The BZWBK sale will improve the bank's capital position by €2.5bn. Analysts expect another €1.3bn to come from M&T.
The fact that Santander was the buyer for BZWBK may complicate the M&T and UK sales, sources said. Santander was considered a leading candidate to take over both assets, but may halt further acquisitions to cool market concerns the bank has taken on too much in a recent buying spree.