Toronto Dominion Bank (TD) has effectively ruled out acquiring AIB's minority stake in New York's M&T Bank and will be focusing instead on acquiring banks with much smaller assets, according to statements by its chief executive last week.

TD chief Edmund Clark told a Morgan Stanley conference in New York last Wednesday that the bank would be considering only banks with $10bn (€7.3bn) or less in assets. M&T has $65bn in assets.

"If you're saying $80bn or $100bn asset acquisitions, unassisted, we don't have much appetite for that," Clark told investors. He said the US economic outlook was "tepid" and left "no room for accidents".

AIB is likely to dispose of its 22.5% share in M&T to help raise some of the €2bn in capital the bank has said it will need this year.

TD, which has spent more than $15bn on acquisitions in the US over the past five years, including M&T competitor Commerce Bank, is seeking to expand its 1,000 branch presence on the American east coast, but is more likely to pick up small, distressed community banks at keen prices at government auctions.

The bank said in November that it would consider acquisitions in the US with help from the Federal Deposit Insurance Corporation.

(additional reporting by Bloomberg)