Predators poised for Allied Irish

ALLIED Irish Banks' shares rose on speculation that the group, battered by a £530m foreign exchange fraud, will be easy meat for predators. Royal Bank of Scotland, which was already running its ruler over AIB before the scandal, is tipped as the most likely bidder.

Analysts said losses run up by rogue trader John Rusnak had badly undermined the credibility of AIB's management, particularly in the US.

Susan Keating, once the high-flying boss of Allfirst, the US subsidiary at the centre of the affair, is expected to pay for the debacle with her job. Chief executive Michael Buckley, who called a crisis board meeting on Thursday, also faces calls to fall on his sword.

The board has ordered an independent report into the affair by an 'eminent person', to be completed within 30 days.

Snapping up AIB would be another big coup for RBS executives following their takeover of NatWest two years ago. The Scottish bank wants to expand in the US, where it already owns Citizens Bank, run by Larry Fish, a highly-acquisitive banker with a £17m paypacket. A deal with AIB would also beef up Royal's presence in Ireland, where it owns Ulster Bank.

Phil Middleton, head of retail banking at Ernst & Young, said: 'A takeover of AIB would make an awful lot of strategic sense for RBS.'

Banking sources said the Scots would prefer a friendly deal. Chief executive Fred 'The Shred' Goodwin would face opposition from Ireland's competition authorities and trades unions if he attempts a hostile bid.

Mark Thomas of broker Fox Pitt Kelton said AIB could cost up to £10bn. The shares rose 38 1/2p to 739p.

Other potential bidders include Bank of Ireland, Abbey National and National Australia Bank, which owns Belfast-based Northern Bank and the National Irish Bank.