AIB has just issued some 633,000 new shares to group and Allfirst executives and former executives under share-option arrangements which generate significant cash or paper profits for the beneficiaries.

AIB would not disclose yesterday which executives or former executives had exercised the share options - to protect their privacy. But the disclosure, in a listing request to the Stock Exchange, comes just days after the Ludwig report revealed serious management and control failures at the Allfirst treasury operation which cost the group $691 million (€783 million) between 1997 and 2002.

An AIB spokesman suggested the options involved were issued some time ago based on profit growth in previous years and pointed out that under the AIB executive share option scheme, some 2,500 participants have options over 29.4 million shares at exercise prices ranging from €3.32 to €15.46 per share.

A number of current and former top executives are beneficiaries under the scheme. Some 617,000 new shares were issued under the AIB Executive share option scheme and 16,000 under the Allfirst Financial stock option plan.

Anyone exercising options under the AIB scheme would have been able to make very significant paper or cash profits.

According to the group annual report for 2000 - the latest available - four executive or former executive directors had significant tranches of options available to exercise at prices ranging from €6.10 to €7.41.

With AIB shares trading yesterday around €13.66 - ahead of their €13.62 level before the $691 million fraud at Allfirst was disclosed - directors exercising options would make paper profits of between €6.25 and €7.56 per share.

A tranche of, for example, 200,000 share options exercised at €6.10 per share would have generated a paper profit of just more than €1.5 million, or a €1.5 million cash profit, if the shares were sold in the market at yesterday's price.

The annual report shows that former group chief executive Mr Tom Mulcahy, who last week resigned from the board of Allfirst, had a tranche of 336,728 share options at the end of 2000 exercisable between 2001 and 2007 at an average price of €6.10 per share.

Group chief executive Mr Michael Buckley had 181,500 outstanding options on December 31st, 2000 exercisable at an average price of €7.41 per share.

Finance director Mr Gary Kennedy had 235,000 options with an average exercise price of €6.49 per share and retired executive director Mr Kevin Kelly had 157,500 options exercisable at €6.18 per share.

Under the Allfirst share option scheme, the annual report discloses that Mr Frank Bramble, who stepped down as chairman of Allfirst last week, had options to acquire 650,000 AIB ADRs (US quoted shares) equivalent to 1,300,000 AIB shares at an average price of $22.45 per ADR.

Some 210,000 of his ADR options, those issued in 2000, cannot be exercised before January 1st, 2003.

AIB said yesterday it had applied to the Irish and London Stock Exchanges to have 633,000 new shares listed.