AIB has declared an interim dividend of 6.8p per share for the half-year to the end of June, a 14.3 per cent increase on the previous first-half dividend. The bank has taken the unusual step of declaring its first-half dividend in advance of the announcement of the interim results on which the payment to shareholders is based.

The early dividend declaration is due to AIB's £840 million acquisition of the US bank, Dauphin Deposit Corporation, which is due to be completed on July 8th. Dauphin shareholders have been offered an option of cash, AIB shares or a mixture of cash and shares for the Dauphin shares.

In its acquisition document, AIB stated that new shares issued to Dauphin shareholders would not qualify for the interim dividend in the year to end December 1997. Because Dauphin shareholders were not involved in AIB over the January to June period on which the interim dividend payment is based, it was felt that payment of this dividend to them would be inequitable to existing AIB share-holders.

While the dividend has been declared earlier than usual, share-holders who are on the AIB share register at the close of business on July 4th will be paid around the same time as usual - around September 24th.

Some 95 per cent of the Dauphin shareholders whose votes on payment options have been counted have opted to take AIB shares rather than cash. But with less than 20 per cent of the votes counted and larger institutional shareholders yet to vote, AIB expects the final split to be nine-to-one in favour of shares.

Dauphin shareholders have until July 3rd to decide on their preferred method of payment. AIB initially expected a seven-to-three split in favour of shares but the increase in AIB's share price has further tipped the balance in favour of shares.

In addition to the capital tax advantages in taking shares, share-holders have to weigh up a cash offer of $43 for each Dauphin shares against the current AIB ADR price of $46.63 a share.