AIB agrees to sell its Polish interests for €3.1 billion

   The  Board of Directors of Allied Irish  Banks, p.l.c. ("AIB") [NYSE: AIB] today announces  that  it  has  agreed  to  sell  its  interests in Poland for a total consideration  of approximately  €3.1 billion.  This represents  the sale of its entire  shareholding in Bank Zachodni WBK S.A. ("BZWBK"), comprising 51,413,790 shares,  representing approximately 70.36% of BZWBK's  issued share capital, and its  50% shareholding in BZWBK  AIB Asset Management  S.A. ("BZWBK AIB A.M.") to Banco  Santander S.A.  ("Santander") (the  "Proposed Disposal").  The price that Santander  has agreed to pay AIB for its shares in BZWBK is PLN11.67 billion (or approximately  €2.9 billion*). Santander has also agreed to pay €150 million for AIB's stake in BZWBK AIB A.M. and therefore AIB will realise total proceeds from the sales of these assets of €3,088 million.  The  acquisition will be carried  out through a public  tender offer for 100% of the  capital of BZ WBK  addressed to all shareholders,  in which AIB will tender all  of its shares. Completion of the  Proposed Disposal is subject to obtaining certain regulatory approvals and obtaining AIB shareholder approval. The sale of AIB's  shares in BZWBK is  not conditional on acceptance  of the tender offer by other BZWBK shareholders.  The  Proposed Disposal is part of AIB's capital raising initiatives as announced on  30 March  2010, and  will  generate  c.  €2.5bn of equivalent equity tier 1 capital  towards meeting AIB's Prudential  Capital Assessment Review requirement set  by the  Irish Financial  Regulator. The  cash proceeds  will be  used as an additional source of liquidity to support AIB's business activities.  AIB  Group Managing Director Colm Doherty said  "We are very pleased to announce the  sale of our  Polish interests today  at the price  achieved. This sale will generate  significant  capital  for  AIB  and  represents  the first step of our recapitalisation  plan that was  set out in  March. The Board  believes that the Proposed  Disposal is  in the  best interests  of AIB and unanimously recommends that  Shareholders vote in favour of the  Proposed Disposal. We continue to make good  progress  on  other  elements  of  the recapitalisation plan and will make further announcements in due course."  A  break  fee  of  €7.5  million  will  become  payable  in  the  event that AIB shareholders  do not approve the disposal resolution at an Extraordinary General Meeting to be convened to approve the Proposed Disposal.  AIB   has   granted  Santander  certain  exclusivity  rights  (which  include  a non-solicit  and a commitment from AIB not to negotiate with, or sell its shares to,  a  third  party)  for  a  period  of  seven  months  from  the  date of the Extraordinary General Meeting to be convened to approve the Proposed Disposal.  A  shareholder circular ("Circular") setting out  the reasons for and background to  the Proposed  Disposal will  be made  available to  AIB shareholders  in due course.  Information on Bank Zachodni WBK and BZ WBK AIB Asset Management  BZWBK  is a Warsaw Stock Exchange listed bank and is Poland's third largest bank by branches and profits, fifth largest bank by loans and fourth largest by total equity.  It provides  a full  range of  financial services for retail customers, small  and  medium-sized  enterprises  and  corporate customers. Apart from core banking   facilities,   BZWBK   provides   insurance  services,  trade  finance, transactions  in the capital,  foreign exchange, derivatives  and money markets. Brokerage  services,  mutual  funds,  asset  management,  leasing  and factoring products  are delivered to customers through subsidiaries with the extensive use of  BZWBK's distribution network. A wide  variety of bank assurance products are offered  to customers in co-operation with the two joint ventures (a general and life  insurance company) established in 2008 with Aviva plc. As at 30 June 2010 BZWBK  reported consolidated total assets  of PLN53.6 billion, customer accounts of  PLN41.3 billion, shareholders'  equity (excluding non-controlling interests) of PLN6.1 billion and profit of PLN0.5 billion in the 6 months to June 2010.  BZWBK  AIB A.M.  is an  asset manager  based in  Poland. AIB (through its wholly owned subsidiary, AIB Capital Markets, p.l.c.) has a 50 per cent shareholding in BZWBK  AIB A.M. with the  remaining 50 per cent owned  by BZWBK. BZWBK exercises operational  control over BZWBK AIB A.M. As  at 30 June 2010, BZWBK AIB A.M. had PLN11.8 billion of assets under management.  AIB  entered  the  Polish  market  in  1995, when  it acquired a non-controlling interest   in  Wielkopolski  Bank  Kredytowy  S.A.  In  2001, Wielkopolski  Bank Kredytowy S.A. merged with Bank Zachodni S.A. to form BZWBK, following which AIB held  a 70.5 per  cent. interest  in the  newly-merged entity. AIB's interest in BZWBK  decreased to  its current  holding of  approximately 70.36 per cent. when BZWBK's share capital was increased in 2009.  2. Financial information  The financial information for BZWBK and BZWBK AIB A.M. prepared by AIB as at 30 June 2010 in accordance with International Financial Reporting Standards (IFRS).    30 June 2010                                                           € million  Profit before tax                                                            174  Profit after tax                                                             132  Profit after tax attributable to                                              35 non-controlling interests  Total assets                                                              13,925  Carrying value of investments                                              1,533  Non-controlling interests                                                    447    Notes:  * converted at rate of PLN3.971 to €1   Morgan Stanley & Co. Limited and AIB Corporate Finance Limited are acting as joint financial advisors in connection with the Proposed Disposal.  In addition Morgan Stanley & Co. Limited and Morgan Stanley & Co. International plc are acting as sponsor and corporate broker, respectively, in connection with the Proposed Disposal.                                          -ENDS-    For further information please contact:-  Alan Kelly                          Catherine Burke  General Manager, Corporate Services Head of Corporate Relations and                                     Communications  AIB Group                           AIB Group  Dublin                              Dublin  Tel: +353-1-6412162                 Tel: +353-1-6413894  email: [email protected]          email: [email protected]    This is not a circular or an equivalent document. Please read the whole of the Circular, in particular the risk factors set out in the Circular. You should not rely on any key or summarized information as set out in this announcement.  This announcement does not constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise  acquire  or  subscribe  for,  any  security.  The  contents  of  this announcement  should  not  be  construed  as  legal,  business,  financial, tax, investment or other professional advice.  Morgan  Stanley &  Co. Limited  is acting  as financial  adviser and sponsor and Morgan  Stanley  &  Co.  International  plc  (together with Morgan Stanley & Co. Limited,  "Morgan Stanley") is acting as corporate  broker, in each such case to AIB  in relation to the Proposed  Disposal. Morgan Stanley is acting exclusively for  AIB and no one  else in connection with  the Proposed Disposal and will not regard any other person (whether or not a recipient of this announcement) as its client  in relation  to the  Proposed Disposal  and will  not be  responsible to anyone  other than AIB for providing the  protections afforded to its clients or for  providing advice in relation  to the Proposed Disposal  or any other matter referred to in this announcement.  AIB  Corporate Finance Limited ("AIB Corporate  Finance") is acting as financial adviser  to AIB in relation to the  Proposed Disposal.  AIB Corporate Finance is acting  exclusively for  AIB and  no one  else in  connection with  the Proposed Disposal  and will not  regard any other  person (whether or  not a recipient of this  announcement) as its client in relation  to the Proposed Disposal and will not  be  responsible  to  anyone  other  than  AIB for providing the protections afforded  to its  clients or  for providing  advice in  relation to the Proposed Disposal or any other matter referred to in this announcement.  Apart from the responsibilities and liabilities, if any, which may be imposed on Morgan  Stanley or  AIB Corporate  Finance by  the Listing Rules, neither Morgan Stanley  nor  AIB  Corporate  Finance  accepts any responsibility whatsoever and makes  no representation  or warranty,  express or  implied, for the contents of this  announcement, including its accuracy,  completeness or verification or for any  other statement made or purported to be made by AIB, or on AIB's behalf, or by  Morgan  Stanley  or  AIB  Corporate  Finance,  or on Morgan Stanley's or AIB Corporate  Finance's  behalf,  in  connection  with  the  Proposed Disposal, and nothing  in  this  announcement  is  or  shall  be  relied  upon as a promise or representation in this respect, whether as to the past or future. Each of Morgan Stanley  and AIB Corporate Finance accordingly   disclaims to the fullest extent permitted  by law  and under  the Listing  Rules all  and any responsibility and liability,  whether  arising  in  tort,  contract  or  otherwise, which it might otherwise have in respect of this document and any such statement.  This  announcement contains "forward-looking statements",  within the meaning of Section 27A of the US Securities Act of 1933 (as amended) and Section 21E of the US  Securities Exchange Act of 1934, as amended, regarding the belief or current expectations  of AIB, AIB's Directors and other members of its senior management about  AIB's  business,  and  the   transaction  described in this announcement. Generally,   words   such   as   "may",  "could",  "will",  "expect",  "intend", "estimate","  anticipate",  "believe",  "plan",  "seek",  "continue"  or similar expressions  identify  forward-looking  statements.  All  statements  other than statements  of  historical  fact  are,  or  may be deemed to be, forward-looking statements.  These  forward-looking  statements  are  not  guarantees  of future performance. Rather, they are based on current views and assumptions and involve known  and unknown  risks, uncertainties  and other  factors, many  of which are outside  the control of AIB and are  difficult to predict, that may cause actual results  to differ materially from any  future results or developments expressed or implied from the forward-looking statements.  The  forward-looking statements speak only as  of the date of this announcement. Except  as required  by the  Financial Regulator,  the Irish Stock Exchange, the FSA,  the London  Stock Exchange  plc or  applicable law,  AIB does not have any obligation  to update or revise  publicly any forward-looking statement, whether as  a  result  of  new  information,  further events or otherwise. AIB expressly disclaims  any  obligation  or  undertaking  to  publicly release any updates or revisions  to any  forward-looking statement  contained in  this announcement or incorporated  by  reference  to  reflect  any  change in AIB's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.    [HUG#1443912]         This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and     other applicable laws; and (ii) they are solely responsible for the content, accuracy and      originality of the information contained therein.  Source: Allied Irish Banks, p.l.c. via Thomson Reuters ONE