Just 14 months removed from a $691.2 million currency-trading scandal, Baltimore-based Allfirst Financial Inc. yesterday became the property of M&T; Bank Corp. of Buffalo, N.Y.
Top executives of M&T; and Allied Irish Banks PLC - Allfirst's parent in Dublin, Ireland - concluded the $3.1 billion deal during an early-morning meeting in New York yesterday, M&T; officials said.
"Officials from both banks signed the papers this morning," C. Michael Zabel, vice president of corporate communications for M&T;, said yesterday. "Allfirst is now the property of M&T; Bank."
Yesterday also marked the last day of work for 346 Allfirst employees, including 204 in Maryland, who had been told in January that they would lose their jobs.
Under the terms of the agreement, AIB received 26.7 million shares of M&T; common stock, plus $886 million in cash, in exchange for all of Allfirst's common stock. AIB ends up with a 22.5 percent stake in the merged company.
Under the deal - announced in September - M&T; becomes the nation's 18th-largest bank, a leap of eight positions from its prior spot of 26th.
The merged M&T; operates more than 700 bank branches and 1,600 automated teller machines in Maryland, New York, Pennsylvania, Virginia, West Virginia and the District of Columbia, the bank said.
Had the deal been completed earlier, M&T; said, the bulked-up bank would have made this year's Fortune 500, Fortune magazine's yearly ranking of the nation's 500 largest public companies.
With estimated revenue of $3.468 billion, M&T; would have been No. 452 - just behind insurer Jefferson Pilot Corp. and ahead of USG Corp., according to a list compiled by M&T.;
"Fortunately, M&T; is a strong bank, a good bank," said Mary Louise Preis, Maryland's commissioner of financial regulation and the state's top banking regulator.
At least initially, Allfirst customers won't see much of a change, M&T; said. The Allfirst name will remain on bank branches, and even on newly ordered checks, for the near term.
The only real hints of the buyout right now consist of small decals on the bank branches and subtitles on ATM screens, which identify Allfirst as a unit of M&T.;
Instead of converting the Allfirst bank branch and ATM network in stages during the next several months, M&T; intends to conduct the necessary behind-the-scenes work first, and then engineer the conversion all at once over the July 4th holiday weekend, according to Zabel, the M&T; spokesman.
During that weekend, the Allfirst signs will come down, M&T; signs will go up, and the Allfirst brand name will disappear, the bank said. Even then, some "post-conversion" work will remain, according to M&T.;
This staged makeover is the main reason M&T; is making its job cuts in three stages, with the first wave of workers losing their jobs today.
Including the 346 fired today, a total of 1,132 Allfirst workers will lose their jobs. Nearly 60 percent of those cuts - 657 employees - will be made in Maryland.
M&T; will cut another 144 workers after the July 4th conversion weekend, and 642 more in the months after that changeover is finished.
Employees learned in January whether they would keep or lose their job. But those slated for layoff were offered inducements to remain on board to help with the conversion, the bank said.
In addition to financial and benefits inducements, M&T; is providing outplacement services to help laid-off workers find new jobs, the bank said.
No local branches are expected to close, M&T; said.
Executives with M&T;, AIB and Allfirst have said that a deal was in the works before the currency-trading scandal broke. But the pressure to sell Allfirst clearly escalated after the fraud was uncovered in early February last year, analysts said.
Allfirst discovered that currency trader John M. Rusnak had run up nearly $700 million in losses over a five-year stretch, covering up his losses by altering company books, falsifying documents, creating dummy trades and then berating subordinates who raised questions about his activities.
In fact, his ruse made it appear as if Allfirst was actually profiting handsomely from its currency trading, even as losses rose into the hundreds of millions of dollars.
In January this year, Rusnak was ordered to spend 7 1/2 years in prison, with the presiding judge describing the sentence as one of the most severe ever for an act of white-collar crime.
Experts have described Rusnak's scheme as one of history's biggest cases of banking fraud.
M&T;'s shares rose $3.09 in trading yesterday to close at $81.67. They are up 3 percent for the year.