Updated to include M&T spokesman's decline to comment.

BUFFALO, N.Y. (

TheStreet

) --

M&T Bank

(MTB) - Get Report

shares surged as much as 9.5% shortly before the market closed, on speculation that the renewed talks between the big regional and

Banco Santander

( STD) are moving forward.

Bloomberg

is reporting that M&T is considering selling a majority stake to Santander, which would include the Spanish bank's purchase acquiring

Allied Irish Bank's

(AIB)

22% stake in M&T, citing sources who spoke on anonymity, because the talks are not yet public.

Banco Santander is reportedly in discussions with the

Federal Reserve

and could hear by the end of the month,

Bloomberg

said.

An M&T spokesman said the bank does not comment on rumors or speculation to

TheStreet

.

Banco Santander has been eyeing M&T, one of the best run U.S. regional banks, for some time as a way to bolster Sovereign Bank, its fledging U.S. business. While M&T and Santander were in discussions earlier this year, no deal was made. One of the

major hang-ups to agreeing on a merger

was the issue of control. M&T is fiercely independent; its management team run by longtime chairman and CEO Robert Wilmers, who is 75.

Bloomberg

is reporting that under the new deal, some element of control will be retained by M&T.

M&T shares closed up 5% to $91 on higher than average trading volume of 1.98 million shares. Banco Santander's stock closed up 1.6% to $12.87 on the

New York Stock Exchange

. Allied Irish shares also traded modestly higher on the

NYSE

.

--Written by Laurie Kulikowski in New York.

To contact the writer of this article, click here:

Laurie Kulikowski

.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.