By ALLISSA KLINE
akline@bizjournals.com | 716-541-1612

Reuters News Service is reporting that M&T Bank Corp.'s largest single stakeholder is "close" to selling its 22.49 percent stake to Spanish financial giant Banco Santander SA.

Allied Irish Banks PLC, which acquired the stake in 2003, must sell it before the end of the year per government orders to meet certain capital ratio requirements. Reuters cites an unnamed source who said the deal could happen "in a week or slightly longer."

Rumors have swirled all week about the possible sale of the stake to Banco Santander. The firm earlier this month paid 3.1 billion euros for AIB's Polish assets.

M&T Bank officials are not commenting on the speculation.

Santander operates Sovereign Bank, a Philadelphia-based bank with 722 branches and $72 billion in assets. Discussions between M&T and Santander about merger opportunities have reportedly taken place on and off this past summer.

The Sunday Business Post, an Irish national Sunday newspaper, reported last week that Dublin-based AIB is considering three options as it nears the deadline to raise capital. It could sell its stake in M&T, sell its British banking operations or exercise a "rights issue" option that would allow it to raise money by selling shares to existing shareholders.