AIB has taken total control of car fleet management firm Allied Arval in a deal to buy out the 51 per cent interest of French bank BNP Paribas.
The upfront consideration was not disclosed but the transaction is believed to have been valued in the region of €2 million initially. "The terms are subject to confidentiality," said an AIB spokesman.
AIB already owned 49 per cent of Allied Arval, which has some 5,000 cars under management in Ireland and is part of the Arval network in Europe.
The sale follows moves by BNP Paribas last year to restructure its leasing and hire businesses. As a result of the buyout, AIB is likely to make a big push to expand the business.
However, the deal's modest scale means it does not represent a significant departure from the strategy of AIB chief Eugene Sheehy of selling non-core assets. Last year AIB sold its 50 per cent stake in fund administration firm AIB/BNY Securities Services (Ireland) to its joint venture partner, Bank of New York. In addition, the bank has raised capital by selling off its headquarters and some branches in sale-leaseback arrangements.
While the Allied Arval deal will not be financially significant for the bank, it strengthens its presence in a sector that offers corporates with large fleet expenditure the opportunity to cut their management costs by taking advantage of opportunities of scale.
Established in 1994, Allied Arval ranks among the largest fleet management companies in Ireland.
The business, which employs about 20 staff, is the beneficiary of AIB's position in the fleet financing market and its links with large-scale corporate clients and small and medium-sized enterprises.
Its range of services includes finance lease, contract hire, vehicle acquisition and disposal, vehicle maintenance management, accident management and fuel management.
The finances of the Allied Arval business are not publicly disclosed.
In Europe, Arval manages in excess of 650,000 vehicles. The business operates in 17 countries. Originally controlled by US group PHH, the firm was established in Ireland in 1994.
Allied Arval tells clients it will remove their exposure to the used-car market while offering fixed monthly costs to enable accurate budget forecasts.
