Allied Irish Bank HQ, Dublin

The state controlled Allied Irish Banks has sold a shareholding in a Bulgarian subsidiary for just $143,000 - after buying it for a staggering $308million.

AIB, now 93% owned by the Irish taxpayer after the Celtic Tiger collapse, purchased just short of 50% of the Bulgarian American Credit Bank at the start of 2008.

Directors at the bank authorized the massive payment for 49.99 per cent of the Bulgarian commercial lender in what now appears tantamount to reckless trading.

Last month the bank’s new board of directors confirmed that it had sold its stake in the Bulgarian company but refused to disclose the price.

The Irish Times has now confirmed that AIB received just $143,000 for its majority shareholding in the Bulgarian financial institution after it sold out to local businesswoman Tsvetelina Borislavova.

The new owner is a former minority shareholder in CIBank, the Bulgarian subsidiary of the Belgian banking group KBC.

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At the time of AIB’s 2008 purchase of shares in BACB, then chief executive Eugene Sheedy said the deal was part of the bank’s strategy for central and eastern Europe.

“This is a strategy which involves acquiring and investing in businesses at reasonable valuations in targeted high growth markets,” said Sheedy at the time.

The Bulgarian bank has now confirmed in a statement to the Irish Times that the AIB stake was purchased for $143,000 by Borislavova’s Clever Synergies Investment Fund.

An AIB spokeswoman told the paper that the state controlled Irish bank had written down the value of its investment in the Bulgarian bank to zero by last year.

“As a result of the sale of its shareholding, AIB no longer has to fund the Bulgarian lender,” said the spokeswoman.

The Bulgarian bank, set up in 1996 to lend to small and medium-sized businesses, is due to repay a $50 million bond next month and make a $36million payment on a $107million loan from AIB.

The paper reports that Borislavova’s company has said that it would provide a loan of $50 million to the Bulgarian bank, struggling in the wake of the collapse in the European economy.

Bulgarian banks have been among the worst hit in central and eastern Europe by the global financial crisis.

The Irish Times also reports that the Bulgarian sale is part of AIB’s plan to dispose of non-core assets to reduce its operations by $277billion of loans and other assets to make the bank self-sufficient again.

The European Central Bank and the Irish Central Bank are supporting AIB with cheap funding as part of the general bank bail-out.

However AIB requires a further $19billion in capital on top of the $102billion already injected into the bank since the financial crash of 2008 to meet losses on property loans.

The bank sold its Polish bank Bank Zachodni last year to raise $35 billion to absorb mounting losses.