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AIB to sell scandal-hit Allfirst

Allied Irish Banks expected to get $2.3 billion from sale of Allfirst
Allied Irish Banks expected to get $2.3 billion from sale of Allfirst

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LONDON, England -- Seven months after being engulfed by a trading scandal, U.S.-based Allfirst Financial has been put on the block by its Irish parent company.

Allied Irish Banks (AIB) said in a statement on Thursday that it was in talks with a U.S. group about "a possible partnership" with Allfirst.

The Dublin-based bank is reportedly negotiating to sell Allfirst to M&T Bank Corp. -- whose largest investor is Warren Buffet's Berkshire Hathaway Inc. -- for about $2.3 billion in cash and stock.

In return, AIB would receive a 22.5 percent stake in M&T, based in Buffalo, New York, according to reports. AIB is also expected to be given four seats on M&T's board.


AIB declined to comment on the reports but a source told CNN a deal could be announced as early as Thursday.

Allfirst has 250 branches from Northern Virginia to Pennsylvania, while M&T has about 450 branches stretching south from New York to West Virginia. The combined company would be one the biggest in the northeast region of the U.S., with assets totaling more than $48 billion.

The deal would also allow AIB -- which purchased Allfirst in the 1980s when it was known as First Maryland Bancorp -- to maintain a presence in the huge U.S. market.

Rusnak: Faces fraud charges over $700 million losses
Rusnak: Faces fraud charges over $700 million losses

There has been growing speculation that AIB was looking to sell the Baltimore-based Allfirst, after revelations in February that one of its foreign exchange dealers, John Rusnak, had racked up nearly $700 million in unauthorized losses.

An internal probe placed some of the blame for the alleged fraud on poor management supervision and inadequate financial controls.

Rusnak is scheduled to go on trial for fraud charges in February. All first chairman Frank Bramble and Chief Executive Susan Keating resigned earlier this year.

AIB (ALBK) shares were up 7.4 percent to 12.35 euros in mid-morning trading on Thursday.

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