ALLIED IRISH Banks has completed the public offering of its 22.4 per cent stake in US regional lender M&T as the bank announced that executive chairman Dan O’Connor was standing down from the post and the board with immediate effect.

The bank completed the public offering of 26.7 million notes at a price of $77.50 each, which – subject to the approval of AIB shareholders next month – will be converted into shares in M&T.

The transaction, which was underwritten by Morgan Stanley and Citigroup, will generate a capital gain of €900 million for AIB, according to analyst estimates.

AIB will hold an extraordinary meeting of shareholders for November 1st to vote on the sale of the M&T stake, which the bank has owned since 2003 following its merger with US bank Allfirst.

The departure of Mr O’Connor, who was appointed AIB chairman in July 2009 and executive chairman in November 2009, means it is not yet clear who will chair next month’s meeting.

A spokeswoman for the bank said the board had not yet decided on an acting chairman.

Minister for Finance Brian Lenihan said last month that Mr O’Connor would leave the bank within weeks, while managing director Colm Doherty would depart before the end of the year.

Mr O’Connor, who has been on AIB’s board since 2007, agreed to take over the role of executive chairman in a compromise deal with the Government as an internal candidate, Colm Doherty, took over as managing director.

AIB also announced the appointment of Jim O’Hara, former general manager of Intel, and Catherine Woods, former head of the European banks equity research team at JP Morgan, as non-executive directors of the bank.

In addition to the €2.5 billion gain on the disposal of Polish subsidiary Bank Zachodni, AIB’s sale of the M&T stake leaves €7 billion to raise to meet the capital target of €10.4 billion set last month.

AIB has said that €5.4 billion of this will be raised through a sale of new shares next month at 50 cent a share, underwritten by the State, and has projected a further €5 billion from the disposal of assets.

The Government has committed up to €3.7 billion through the right issue, on top of the €3.5 billion injected into AIB last year.

This is likely to raise the State’s shareholding in AIB to more than 90 per cent from 18.6 per cent.

The bank is targeting a further €1.6 billion from disposals. The sale of AIB’s UK division could boost capital by €1.3 billion. AIB rose 3.1 per cent, or 1 cent, to 43 cent a share, giving the bank a market value of €464 million.