A hostile bid for the Singapore bank, Keppel Capital, may signal an early exit by AIB from that market. Executives are examining the bid from the Singapore-based OCBC Bank which, if accepted, would value AIB's interests at more than £10 million (#12.7 million). The bank would not comment yesterday.

AIB has a 0.94 per cent share-holding in the bank, which is one of the smallest in Singapore. It also holds an option to buy a 24.9 per cent stake in Keppel Capital by August 2002.

OCBC has offered 3.38 Singapore dollars per share, a 14 per cent premium on Keppel Capital's closing price. AIB paid 3.34 Singapore dollars per share. Those with options or warrants, such as AIB, have been offered 1.01 Singapore dollars per warrant.

Yesterday Keppel Capital said it was holding discussions with a number of other financial institutions and has advised shareholders and those with warrants not to take any action for the time being.

AIB executive Mr Walter Coakley is currently running Keppel Capital.

There has been much speculation as to what AIB would decide in relation to Singapore in recent months, particularly given the appreciation of Keppel shares. AIB has been active in that market for many years offering private banking and treasury operations. This business was sold to Keppel in 1999 with AIB realising a #15 million profit.

Investors and some of the international rating agencies have been less than enthusiastic about AIB's interest in this part of the world. The bank will wait to see whether another bidder emerges. By accepting the current bid, the bank would be largely covering its costs. It has always stressed that the Keppel option offered AIB an opportunity in the South East Asia market without investing substantially. That market is not as mature as the Irish one in terms of products and sales, but it is advanced in terms of electronic banking.