CANADIAN BANK EYES STAKE IN AIB; Deal link to taxpayers taking debts.

Byline: PAT FLANAGAN 

A TOP international bank is set to buy a stake in AIB - but only after the Irish taxpayer takes over the fatcat's massive debts.

It has been reported that the Canadian Imperial Bank of Commerce approached the country's biggest bank in the last two weeks.

In a statement AIB confirmed it had been contacted but refused to comment on the identity of the bank.

This has led some analysts to believe that, while discussions may have taken place, the agenda was exaggerated in a bid to boost AIB's share price.

An independent financial analyst said that he took the claims of a deal in the pipeline with "a pinch of salt".

He added: "There may well have been talks from an interested party trying to get their hands on AIB's American subsidiary.

"AIB has as much chance of selling its Irish operation as a leper has of selling his clothes.

"Nothing is going to happen until Nama takes on its debts so you'd have to wonder why this was leaked. It could well be to put pressure on the Government to speed up the process because if Nama is a non-runner AIB will be nationalised."

A statement said: "Allied Irish Banks notes the recent press comment regarding interest from a third party taking a minority stake in the Group and confirms that it has received such interest. However, any discussions with regard to this matter are preliminary and are not expected to progress in the near term, at least until there is greater clarity on NAMA among other issues.

"There can be no certainty that these discussions will lead to a proposal to invest in the Group or a transaction being concluded."

Canadian banks are among the richest in the world and have been buying up stricken financial institutions since the beginning of the financial crisis.

The country's financial regulator imposed strict controls and none of its banks have needed public cash and have no toxic assets.

Shares in Irish banks jumped following reports of the AIB approach.

Its stock rose seven per cent to reach EUR2.25 having jumped by 14 per cent in early trade.

AIB is now worth slightly more than EUR2billion but it was forced to write off EUR3.6billion in bad loans to developers in the six months to last June.

It is believed that up to a quarter of the bank's EUR134billion loan book is "under stress" and, if these were defaulted on, would leave AIB facing a loss of more than EUR33 billion.