AIB will merge its two Polish banks in a move which will create an operation with total assets of 21.2 billion Polish zlotys (€5.4 billion) and the fifth-largest bank in Poland.
When the merger is completed in May 2001, Bank Zachodni WBK will be one of the largest banks quoted on the Warsaw Stock Exchange. AIB has a majority stake in both banks: 81.6 per cent of Bank Zachodni and 60.1 per cent of Wielkopolski Bank Kredytowy (WBK).
The group will own about 70 per cent of the merged bank.
Regulatory approval and backing from minority shareholders is being sought and extraordinary general meetings are expected to be held before Christmas. The merger will be effected through a share swap. Bank Zachodni will offer its shares to WBK shareholders on the basis of the adjusted net assets of each bank.
Independent advisers will be appointed by each bank to advise on the terms of the share exchange.
Bank Zachodni, in which AIB acquired an 80 per cent stake in 1999, has 6,500 employees, 203 branches and 265 automated teller machines.
WBK, where AIB took its initial stake in early 1995, has 5,000 employees, 196 branches and 184 ATMs.
The merger will result in some staff reductions "arising both from the merger and the implementation of the information technology investment", AIB said in a statement.
While the number of job losses will not be finalised until November, AIB managing director (Poland) Mr Michael Buckley said most would be achieved through "natural attrition and voluntary severance". The merger would ensure the banks get the maximum advantage from the $100 million (€115.1 million) investment in information technology currently underway, he said.
In addition to providing a platform to ensure uniform products and services throughout the combined operation, the new technology would allow "the expansion of the branch network, using small and versatile outlets, and provide a robust platform for e-commerce activities", AIB said. The merger, along with information technology expenditure, would be earnings-enhancing for both sets of shareholders within 18 months, he forecast.
The group plans to open 19 outlets in Warsaw by the end of 2001 and expects to have 530 branches and 640 ATMs by the end of 2002.
AIB said the merger made "good business sense" because of the proximity of many of the banks' existing operations in western Poland and because of the synergies which would arise - including benefits from cutting head office costs and streamlining work practices.
Mr Jacek Ksen will be the president of the merged bank, the registered office of which will be in Wroclaw.
"We believe that Bank Zachodni WBK has excellent prospects for growth and we plan to exploit this by the dynamic expansion and development of our branch and electronic networks in all attractive markets.
"This development will benefit customers, shareholders and staff by providing better sales and service coverage, enhanced earnings and synergy benefits, and improved career prospects in a stronger, more competitive organisation," he said yesterday.
