Allied Irish Banks, p.l.c. and M&T Bank Corporation Announce Strategic Partnership; Allfirst Financial Inc. to be Merged into M&T Bank


BUFFALO, N.Y. and DUBLIN, Ireland and BALTIMORE, Md., Sept. 26, 2002 (PRIMEZONE) -- Allied Irish Banks, p.l.c. ("AIB") (NYSE:AIB) Dublin, Ireland and M&T Bank Corporation ("M&T") (NYSE:MTB) Buffalo, NY today jointly announced that they have entered into a strategic partnership designed to create a major U.S. regional bank in a $3.1(1) billion transaction (the "Merger").

(1) Based on 30 day rolling average share price of M&T Bank

The merger of M&T and Allfirst Financial Inc. ("Allfirst") will create a strong mid-Atlantic banking franchise with over 700 branches in six states and the District of Columbia, and a leading deposit-market share in the combined area of upstate New York, central Pennsylvania and Maryland ("Enlarged M&T"). The expanded franchise will be amongst the top twenty largest U.S. banking companies with pro forma combined assets of approximately $49 billion as of June 30, 2002. Allfirst's primary banking subsidiary, Allfirst Bank, will be merged into Manufacturers and Traders Trust Company (M&T Bank), M&T's principal commercial banking subsidiary.

Key details of the merger are attached.

Partnership overview



  - Long-term strategic partnership underpinned by:
  - strong alignment between management and shareholders;
    reciprocal Board representation;
  - AIB's involvement on key M&T Board committees;
  - the merged entity will be managed by M&T's proven management
    team;
  - key AIB executive to join M&T top management team;
  - AIB receives 22.5% stake in the Enlarged M&T plus $886 million in
    cash;
  - It is expected that approx. $450 million will be used to buy back
    AIB shares;
  - Significant synergies are expected to be realised:
  - cost savings of $100 million; $60 million expected in 2003;
  - Merger expected to be earnings enhancing for both partners;
  - Merger transforms both franchises' position in U.S. regional
    banking;
  - Combined franchise will have a leading market share in a region
    which includes six states and the District of Columbia,
    equivalent to the 6th largest state in the country in terms of
    deposits and the 5th largest state in terms of population.
  - Well positioned for future expansion, post integration.

M&T's track record as a consistently best in class performer will be applied to developing Allfirst's strong regional franchise in growth geographies. Since 1983, M&T has achieved:


       - a compound annual growth of 25% in cash earnings per share;
       - a compound annual rate of return to shareholders of 24%;
       - the highest share price appreciation of any of the top 100
         U.S. banks;
       - the sixth highest return to shareholders compared with all
         companies in the Fortune 500 since 1981.

    M&T's board of directors received a financial fairness opinion
    from Lehman Brothers, Inc. and was represented by the legal firm
    of Arnold & Porter. AIB's board of directors received financial
    advice from AIB Corporate Finance and a financial fairness
    opinion from Merrill Lynch. AIB's board of directors was
    represented by the law firm of Wachtell, Lipton, Rosen and Katz.

    Michael Buckley, Group Chief Executive, AIB said: "AIB's
    partnership with M&T is the ideal opportunity for us to
    reposition and strengthen our involvement in U.S regional
    banking. Following a comprehensive review of our strategic
    options, I believe that we have found in M&T a partner with whom
    we share a common ethos. Together we create a long term,
    sustainable growth proposition that is mutually beneficial and
    which will create compelling value for AIB shareholders."

    Robert G. Wilmers, Chairman, President and CEO of M&T said:
    "Allfirst is the perfect partner for our growing mid-Atlantic
    presence. Allfirst is in growing markets, they have strong market
    share, and business strengths that will enhance our own operating
    mix. We anticipate a smooth integration of our businesses, great
    service for our new and old customers, while we continue to
    enhance value for our shareholders."

   See notice on page 6 of the release regarding this afternoon's
            briefings for Investors, Analysts and Media.

    Key details of the merger:

    The Merger represents a long-term strategic partnership between
    AIB and M&T. AIB will nominate four Directors to the Board of the
    combined entity. Bob Wilmers, Chairman, President & Chief
    Executive Officer of M&T, will join the AIB Group Board of
    Directors, as a non-executive director.

    Michael Buckley, Group Chief Executive of AIB, will take a
    permanent seat on the Board Executive Committee of M&T which
    meets fortnightly and carries the full powers of the M&T Board of
    Directors between main Board meetings. Members of this committee
    currently include the Chairman, Vice-Chairman and four non
    executive Directors of M&T. AIB will designate one member on the
    nominating and compensation committee and will also designate an
    independent director to serve on the audit committee.

    Eugene Sheehy, currently Chairman and CEO of AIB's U.S. Division,
    will take up the position of Chairman and CEO of the Maryland and
    Pennsylvania regions, with geographic and profit responsibility
    for over one-third of the Enlarged M&T. Eugene will join the
    Executive Management Committee and Board of Directors of M&T. In
    recognition of his full time commitment to the M&T franchise,
    Eugene will step down from his position on the AIB Group
    Executive Committee.

    AIB will receive a 22.5% stake, being 26.7 million shares, in the
    Enlarged M&T organisation and these shares will be retained by
    AIB. AIB will also receive $886 million in cash, of which approx.
    $450 million will be used to buy back AIB shares, with the
    balance to be used for general corporate purposes. Based on the
    30 day rolling average price of M&T shares, the transaction is
    valued at $3.1 billion.

    The merger is expected to be modestly accretive for AIB's 2003
    earnings based on:

       - market consensus forcast growth in M&T (excluding merger
         related one time expenses);
       - marginal growth in Allfirst;
       - expected cost savings in the Enlarged M&T, forecasted to be
         $100 million ($60 million in 2003);
       - post transaction share buyback;

    AIB's pro forma tier 1 capital ratio will improve to
    approximately 8.3% from 6.8% at 30 June, 2002.

    M&T and Allfirst have branch networks of 451 and 262
    respectively. The networks are contiguous with little overlap. It
    will be a primary focus of management to ensure that there is
    minimal disruption to the level of service provided to our
    customers during the integration. Cost savings are expected to be
    largely achieved through the rationalisation of support and
    administration activities. Full details will be communicated to
    all employees.

    The potential for growth in the Enlarged M&T will provide
    significant benefits to the shareholders of AIB and M&T, and will
    be facilitated by the contiguous nature of the franchises and the
    fact of each partner being in a position to exchange products,
    knowledge and experience.

    Detailed arrangements have been agreed by AIB and M&T to ensure
    that, through its Board representation, AIB will play an active
    role in all future strategic decisions. In addition, a range of
    areas of cooperation have already been identified by AIB and M&T
    management to ensure an active exchange of knowledge and
    expertise relating to all aspects of retail and commercial
    banking.

    AIB's "Not for Profit" business in the U.S., "Allied Irish
    America" is not included in the merger.

    The Merger is subject to the approval of the AIB and M&T
    shareholders and is conditional on Irish and U.S. regulatory
    approvals. The approval of AIB's shareholders will be sought at
    an Extraordinary General Meeting and an explanatory circular
    describing the Merger will be sent to shareholders in advance of
    the meeting. Target for completion is 1st Quarter 2003.

    Background

    AIB has been involved in U.S. regional banking since 1983. Since
    that time, we have built a strong business through acquisition
    and organic growth which for many years has contributed a
    significant percentage of AIB's overall profit. Allfirst's market
    share position in its core franchise area has been an enduring
    strength.

    However, for over twelve months, we have been considering whether
    an alliance with another U.S. regional bank would increase the
    earnings momentum and secure our long term position in U.S.
    regional banking. We started by identifying key criteria that had
    to be clearly evident in a potential partner. These were:

       - A common set of values, ethos and culture to AIB;
       - A desire to form a genuine partnership with AIB;
       - A proven performance track record that is convincing and
         sustainable;
       - A management team that has depth and a complete set of
         community and commercial banking skills;
       - Integration skills that would ensure an acceleration and
         successful completion of Allfirst's progression to becoming
         a community bank in its retail market;
       - A strong and contiguous franchise with scale;
       - A location and suite of products and services that make
         revenue and cost synergies readily achievable.

    Using these criteria, we initiated a series of discussions with
    senior management in a range of relevant U.S. regional banks.
    During the course of these discussions, which have continued with
    various institutions until recently, the AIB Group CEO, Michael
    Buckley, first made contact with his counterpart in M&T Bank
    Corporation, Robert G. Wilmers, in October 2001.

    During the intervening months, it became increasingly apparent
    that a merger of Allfirst and M&T would be mutually beneficial
    and the option that best created shareholder value for AIB. It is
    clear that M&T's philosophy of adopting a customer centric,
    community bank and full service commercial banking proposition
    has consistently generated superior performance and returns for
    over two decades. This approach is exemplified by M&T's ability
    over the past three years to increase, by one third, the number
    of their retail customers who on average utilise three or more
    M&T services.

    Both Allfirst and M&T share the view that good community banks
    support their communities by having substantial programmes of
    corporate giving.

    A number of statements we make in this document are not based on
    historical fact, but are "forward-looking" statements within the
    meaning of the Private Securities Litigation Reform Act of 1995.
    Actual results may differ materially from those projected in the
    forward-looking statements. Factors that could cause actual
    results to differ materially from those in the forward looking
    statements include, but are not limited to, global, national and
    regional economic conditions, levels of market interest rates,
    credit or other risks of lending and investment activities,
    competitive and regulatory factors and technology change.

    A briefing for Investors and Analysts will take place as follows;
    There will be a live video link to New York for a presentation by
    Robert G. Wilmers, Chairman, President & Chief Executive Officer,
    M&T, and Michael Buckley, Group Chief Executive, AIB, followed by
    a questions and answers session.


Dublin   2:00p.m., Main Conference Room, AIB Headquarters, Bankcentre,
         Ballsbridge, Dublin 4.

London   2:00p.m., City Presentation Centre, 4, Chiswell Street,
         London EC1Y 4UP.

New York 9:00a.m., The Millennium Broadway Hotel, 145 West 44th Street,
         New York (between Broadway and 6th Avenue).

Webcast  Logon to http://www.aibgroup.com/webcast and follow the
         onscreen instructions. The webcast will include the full
         presentation followed by the questions and answers session

    A briefing for all media will take place as follows;
    There will be a live video link to New York for a presentation by
    Robert G. Wilmers, Chairman, President & Chief Executive Officer,
    M&T, and Michael Buckley, Group Chief Executive, AIB, followed by
    a questions and answers session.

Dublin 4:00p.m., Main Conference Room, AIB Headquarters, Bankcentre,
       Ballsbridge, Dublin 4.

London 4:00p.m., City Presentation Centre, 4, Chiswell Street, London
       EC1Y 4UP.

Allfirst Financial Inc. is a bank holding company with its headquarters in Baltimore, Maryland. At December 2001, Allfirst had consolidated total assets of $18.8 billion.

Allfirst's distribution network consists of 262 full branches and 605 automated teller machines located in Maryland, Washington D.C., Northern Virginia, South Central Pennsylvania and Delaware, in conjunction with a telephone and web bank.

Allfirst provides comprehensive corporate, commercial, correspondent and retail banking services, personal and corporate trust services and related financial products and services to individuals and businesses.

In the year to December 2001, Allfirst had total income of $547m ($912m excluding fraudulent foreign exchange trading), with a net loss after tax of $37m (a profit of $201m excluding fraudulent foreign exchange trading losses). At December 31, 2001, the bank had total loans and leases of $10,754m and deposits of $13,070m.

Net assets at that date were $1,656m. Net assets subject to the transaction amounted to $1,696 million at June 30, 2002. The net loss for the year ended December 31, 2001 in respect of the net assets subject to the transaction amounted to $37 million (a profit of $201 million excluding fraudulent foreign exchange trading losses).

To view this release in its entirety, please click the link: http://reports.huginonline.com/874963/108382.pdf



            

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