Hundreds of staff at AIB are considering their options after being turned down for a lucrative early retirement scheme.

Letters were sent out last week to almost 400 staff, telling them they had failed to be selected for the scheme, which is expected to cost the bank around €26 million.

About 630 employees applied for the voluntary severance programme under which the bank will shed 250 jobs in Ireland and Britain. A number of those who were turned down have sought legal advice on their positions, according to staff sources.

"There is certainly some personal frustration and disappointment out there," said a spokesman for the Irish Bank Officials' Association (IBOA).

A spokesman for AIB said he was unaware of anyone pursuing legal channels and added that the bank had not received any confirmation of such action.

He expressed surprise that people turned down for early retirement would resort to legal action at this stage as there was an appeals process, which was outlined in the letters sent to unsuccessful candidates.

A three-man group, comprising independent industrial relations consultant Mr Phil Flynn and representatives of the bank and the IBOA, was in charge of assessing candidates for the early retirement scheme, which was open to AIB staff over the age of 50.

All sides said the process was "fair and transparent" and were confident it would stand up to any challenge.

The bank has kept an end-April deadline for concluding the scheme. Sources in AIB last night conceded this was unlikely to be met but said the bank was determined that those people selected for the scheme would leave the bank in the next few weeks.

The early retirement programme was open to staff in the Republic along with the First Trust operation in the North and a number of Irish staff at the bank's British business.