US INTERESTS: If AIB decides to sell its troubled Maryland Bank, Allfirst, in the wake of the debacle over the loss of $691.2 million (€799 million) in rogue trading, it will almost certainly decouple and retain an Allfirst subsidiary that is central to AIB's aggressive expansion plans in North America.

This is Community Counselling Services (CSS), America's biggest fund-raising consultancy, which AIB bought through Allfirst for an undisclosed sum in May of last year. It also added on last month, depending on regulatory approval, the Canadian equivalent of CSS, Ketchum Canada.

CSS and Ketchum were purchased to play a strategic development role in AIB's most profitable business in the US (outside of Allfirst), that is, servicing the lucrative not-for-profit sector.

The development of AIB's not-for-profit business goes back 16 years, to a chance conversation in 1986 between the financial adviser to the Catholic Archdiocese of New York, Mr Jim Hallisey, who was an account holder at AIB's US high-street branch in Manhattan, and an AIB official, about how the archdiocese raised finance for capital projects.

The official introduced Mr Hallisey to Mr Billy Strickland, then AIB's New York-based vice-president of corporate banking (i.e. looking after Irish firms). Out of that meeting AIB was asked to provide financing for the archdiocese's Kateri nursing home on 87th and Riverside Drive, the largest nursing home in New York.

"That's how it all started," said Mr Strickland, who is now president and chief executive of Allied Irish America (AIB operations excluding Allfirst).

"They were happy with us and they recommended us to Bishop Mugabero of the diocese of Brooklyn, who in turn recommended us to Monsignor Brian Walsh, the head of Catholic charities in the archdiocese of Miami. Through referrals and hard work we developed the business nationally. There are just over 180 dioceses and archdioceses in the Catholic Church in the US and we currently bank around 45 of them.

"It started with the Catholic Church but over the years it has developed into other denominations, including the Presbyterian Church, the Baptist Church, the Methodists, Lutheran and Jewish faiths, and various other denominations. We've also expanded into non-denominational work with museums, foundations, cultural institutes, research institutes which are all not-for-profit corporations."

As AIB's diocesan and other business expanded over the years, they kept running into officials from CCS who would be advising the bishops and museum boards on how to raise the money from charities, foundations, wealthy individuals or mass appeals to repay capital loans. "While we would go in to provide the financing, in many cases CCS would be hired to organise a fund-raising campaign, the proceeds of which would be used to repay the debt," said Mr Strickland.

"CCS has been around since 1947, it has a strong reputation in raising money, particularly for dioceses and archdioceses. We met up with the CCS people when they were organising Catholic campaigns and we provided the loan funds. Ultimately we decided that if we acquired them we could get the best benefits for both sides."

AIB has now in effect, by purchasing CCS, created a one-stop shop for charitable and non-profitmaking institutions seeking capital anywhere in the US.

It has established a unique niche in providing the full array of financial services to the sector, including credit, credit enhancement, cash management, asset management and risk management services.

"Generally there'll be two parts to it," said Mr Strickland. "One will be financing and number two will be capital campaigns. When we look at the role CCS played, involved in major fund-raising campaigns for non-profits, there is obviously tremendous business potential."

AIB has not disclosed how much it paid for CCS or Ketchum, and CCS is not detailed as a separate asset in Allfirst's February 20th account statement. Nor will AIB disclose how much its not-for-profit business is now worth, but it is by far the main business at AIB's six offices throughout the United States, and it differentiates AIB in the US from its rival Bank of Ireland, which has developed instead a much bigger asset management operation under Mr Denis Curran in Greenwich, Connecticut.

CCS has 275 staff around the US in nine major cities, as well as offices in London and Dublin, and has managed campaigns like that of Human Rights Watch and Habitat for Humanity International.

Ketchum, founded in 1984, has 85 employees across Canada and also counts Catholic dioceses among its clients.

Some idea of the money involved can be gleaned from Allfirst's account statement of November, which shows that it took in $10.4 million in revenue from consulting - mainly from CCS - in less than six months, and from the fact that last year CSS said its projects raised close to $1.5 billion and Ketchum is involved in raising $800 million for causes in Canada and Europe.

Generally the consulting costs 3 to 8 per cent of money raised.The purchases of CCS and Ketchum were made through Allfirst Financial rather than directly by AIB, mainly for tax purposes.

The financials for both were consolidated into the Allfirst numbers, said Mr Strickland, making them "part of a legal entity as a wholly owned subsidiary of Allfirst... because there were certain tax advantages".

Significantly the new chairman and chief executive of CSS, Mr Brian Leeney, reports not to Allfirst's president and chief executive, Ms Susan Keating, but to the chief executive of AIB's US division, Mr Frank Bramble.

The CCS and Ketchum acquisitions reflect AIB's strategy to build what it calls "a world-class not-for-profit business by combining the banking strengths of Allfirst and AIB with fund-raising expertise and services."

"There are approximately a million not-for-profit organisations in the US," said Mr Strickland. "They represent about 6.5 per cent of GDP so it's a very sizeable part of the economy."

Asked if AIB would keep its fund-raising consultancy subsidiaries if it were to divest itself of Allfirst in the wake of the trading loss crisis, Mr Strickland said: "I really don't know, but obviously it's a particularly good fit for our business nationally."