AIB Gangsters

ALLIED IRISH Banks has sold its half share in a Bulgarian commercial lender for €100,000 – just 3½ years after paying €216 million for the investment.




The Irish bank, which is 93 per cent owned by the State, said last month that it sold the 49.99 per cent share in Bulgarian American Credit Bank but didn’t disclose the price paid or the identity of the buyer at the time.



It emerged yesterday that the stake was bought for €100,000 by the Bulgarian businesswoman Tsvetelina Borislavova, a former minority shareholder in CIBank, the Bulgarian subsidiary of the Belgian banking group, KBC.



At the time of AIB’s purchase of the stake, chief executive Eugene Sheehy said the investment was part of its strategy for central and eastern Europe “which involves acquiring and investing in businesses at reasonable valuations in targeted high growth markets”.



The Bulgarian bank confirmed in a statement that the stake was purchased for €100,000 and the buyer was Ms Borislavova’s Clever Synergies Investment Fund.



An AIB spokeswoman said that it had written down the value of its investment in the Bulgarian bank to zero by last year and that as a result of the sale of its shareholding, AIB would also no longer have to fund the Bulgarian lender. She declined to say how much capital the Irish bank would have to inject into the lender.



The Bulgarian bank, set up in 1996 to lend to small and medium-sized businesses, has to repay a €35 million bond next month and make a €25 million payment on a €75 million loan from AIB.



Ms Borislavova’s company has said that it would provide a loan of €35 million to the Bulgarian bank.



Bulgarian banks have been among the worst hit in central and eastern Europe by the the global financial crisis.



The sale of the investment is part of AIB’s plan to dispose of “non-core” assets to reduce its operations by €19.4 billion of loans and other assets to make the bank self-sufficient again. AIB is being supported with cheap funding from the European Central Bank and the Irish Central Bank.



AIB requires €13.3 billion in further capital on top of the €7.2 billion already injected into the bank since the financial crash of 2008 to meet losses on property loans.



The bank sold its Polish bank Bank Zachodni last year to raise €2.5 billion to absorb mounting losses.



In a separate development, AIB said that it would make an interest payment due on a subordinated bond to a payout agent on or before June 25th, pending a High Court decision in a case taken by an AIB subordinated bondholder.