Banco Santander SA, Spain's biggest bank, agreed to buy Allied Irish Banks PLC's stake in Bank Zachodni WBK SA for 2.94 billion euros ($3.7 billion) to expand in Poland as growth in Western Europe stalls.

Santander will also buy the Irish lender's stake in BZ WBK Asset Management for a further 150 million euros ($191 million) in cash, the Spanish bank said Friday.

Allied Irish is selling its 70% stake in BZ WBK as regulators force it to bolster a balance sheet depleted by Ireland's economic slump and real estate losses.

Santander is also in talks to buy Allied Irish's stake in M&T Bank Corp., according to press reports.

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