Many of AIB's major shareholders have told the bank to sell its Allfirst subsidiary in the wake of the $691 million (€784.5 million) foreign exchange trading fraud. The bank has said it will re-evalate its position on Allfirst in the next six to nine months.

AIB has been meeting the large investment institutions in recent weeks with further presentations planned over the next fortnight. AIB group chief executive, Mr Michael Buckley, has led many of the meetings with key investors.

Sources in the investment industry suggest that many fund managers, particularly in Britain, are keen for AIB to cut its losses and exit the US. Others, mainly in the Republic, have cautioned against any knee-jerk reaction, telling the bank to repair the damage and sell the Baltimore bank for a good price.

AIB shares were weaker in Dublin yesterday, a move put down to profit-taking with investors taking advantage of the rise in the share price since its low on February 6th when the fraud was announced. AIB shares hit a 2002 high of €14.35 earlier this week. Yesterday, the shares closed at €13.82, down 24 cents.

Pressure to sell Allfirst comes as AIB disclosed it was forced to lend $800 million to its troubled US subsidiary in the past two months to ensure it was adequately capitalised. In documents filed with the US Securities and Exchange Commission (SEC) this week, AIB further stated that Allfirst would not be able to pay a dividend to its parent because of the massive fraud.

According to information filed, Allfirst has lost some of its core deposits as a result of the fraud and it immediately faced higher costs to raise funds in the market for customers. AIB provided $500 million of short-term funding to Allfirst and a further $300 million to the Allfirst parent company.

Some $100 million of these funds was for six months while $200 million was provided as long-term funding for a period of five years.

The bank cautions that continued uncertainty surrounding Allfirst's credit ratings, or a ratings downgrade, would have an adverse impact on the price at which it would be able to secure funds for its business in the markets.

In outlining the risks to Allfirst in the months ahead, AIB noted it had lost retail and commercial deposits while new business development has been severely damaged by the fraud. "With the issuance of the Ludwig report, Allfirst's core deposit base has stabilised and business development efforts have improved.

"However, a continuation of negative press coverage, combined with the reputational harm to the Allfirst name arising from the foreign exchange losses, could have an adverse impact on the company's results of operations."

It also warned that negative press coverage had the potential to harm morale and may lead to the loss of key management and staff from the Baltimore-based bank. The bank also signalled the potential for substantial fines as the fraud continued to be investigated by the Federal Reserve, the Maryland State Banking Commissioner and the SEC.