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Letter of Correspondence

 Mr. John P. Nolan,

 Accounting Branch Chief,

 Division of Corporation Finance,

 United States Securities and Exchange Commission,

 100 F Street, N.E.,

 Washington, D.C. 20002

 August 5,
2005

 Re: Allied Irish Banks, p.l.c.

Form 20-F for the fiscal year ended December 31, 2004

 File Number: 001-10284

 Dear Mr. Nolan,

 I refer to your letter of
June 20, 2005, in respect of the above filing and to the telephone conversations and subsequent e-mail correspondence between Mr. Brendan McHugh and Ms. Paula Smith. We have reviewed your comments and have detailed below our response and where
appropriate indicated the relevant action we have taken with regard to preparing future filings.

 Employee Benefits, page 66

1.
Please provide a summary of subsidized loans and deposits with preferential rates provided to employees including, but not limited to:

•

The total number of loans to employees;

•

The total principal amount outstanding for employee loans and deposits;

•

The monetary value of employee loans or deposits concentrated with individual employees;

•

Average or range of interest rate discounts/premiums for loans and deposits respectively;

•

Treatment of interest income/expense during consolidation and the reconciliation to US GAAP;

•

The guidelines, limitations and oversight for employee loans and deposits.

 Please review paragraphs 2 and 24 of SFAS No. 57 and Rule 4-08 (k) of Regulation S-X to ensure that you are in compliance. Discuss why
you continue to believe your presentation is appropriate and/or explain what additional disclosures or other actions you plan to undertake in future filings to ensure full compliance.

 1

 AIB response

 Preferential rates are offered to employees on loans and deposits.

 The main loan products provided are;

•

Preferential Rate Home Loans – these loans are available to all employees (who have completed 6 months service and have completed an initial probation period) up to a maximum
of €190,460 (maximum in United Kingdom - GBP150,000), at 3% per annum for the duration of the loan. The maximum term is the sooner of retirement or 35 years (25 years in the United Kingdom). Approximately 190 executives of the Group can obtain
home loans up to a maximum of approximately €317,434 (maximum in the United Kingdom - GBP250,000), at 3% per annum for the duration of the loan. The maximum term is 35 years. Members of the Group Executive Committee (1) are entitled to home loans at 3% for the duration of the loan. The maximum amount and term is determined on a case-by-case
basis. All employees of the Group are also entitled to the Bank’s commercial rate home loan facilities subject to normal lending criteria.

•

Preferential Rate Personal Loans – these loans are available to all employees up to a maximum of €19,046, at 4% for the duration of the loan. Executives of the Group can
obtain personal loans up to a maximum of €31,744, at 4% for the duration of the loan. The maximum term for preferential rate personal loans is 5 years.

 As at December 31, 2004, there were 12,976 preferential loan accounts, with a total principal outstanding of approximately €636
million. The range of preferential interest rates is between 3% and 4%.

 In the
financial period under review, all deposits by employees attracted an interest rate at the higher of 5% or the prevailing European Central Bank (‘ECB’) rate. From February 1, 2005, the company introduced a ceiling whereby staff may hold up
to €100,000 at the higher of 5% or the ECB rate. For all deposits in excess of €100,000 the ECB rate is applied and there is no upper limit on the funds attracting this rate. The total principal outstanding for deposits at preferential
rates as at December 31, 2004 was approximately €570 million. There is no significant concentration with individual employees.

 The granting of preferential rate loan facilities is subject to the same credit approval process as would be applied to a loan at market rates to a third party and is
administered through AIB Group’s Staff Business Unit. The Group Executive Committee sets the policy with respect to preferential loans and deposits.

(1)
The Group Executive Committee comprises the most senior executive management in the Group.

 2

 Interest on subsidized loans and deposits to employees at preferential rates is credited/charged to the income statement
at the rate at which it is earned/charged for both Irish and US GAAP.

 The
related party transactions on page 60 of the 2004 20-F includes information on loans to directors including executive directors. The benefits arising from loans to executive directors is included on the remuneration table on page 48. Having
completed a further review of SFAS No. 57 and Rule 4-08 (k) of Regulation S-X, we have concluded that related party disclosure should include details of the loans to directors and executive officers. We will, in future filings, expand the
‘Loans to Directors’ section to include loans to ‘Other Executive Officers’ of the Group.

 Accounting for investment in M&T Bank, page 164

2.
Please tell us specifically the differences in accounting treatment between Irish and United States GAAP as applied to your investment in M&T and the Group’s share of
profits of M&T. Your discussion should include but not be limited to:

•

The accounting treatment for the consolidated statement of income and consolidated balance sheet items existing at the time of the sales transaction and for the current financial
period;

•

The nature of the investment in M&T policy and the criteria you use to apply the equity or cost methods. Specifically discuss the amount of control AIB can enact on M&T
policy and management decisions and the resulting impact on your accounting determinations for both Irish and US GAAP. Please refer to APB Opinion 18 paragraph 6 for US GAAP;

•

Explanations of how these differences relate to the Adjustments to Net Income table on page 165, the Consolidated Ordinary Stockholders’ Equity table on page 166, and the
Consolidated Total Assets table and Consolidated Total Liabilities and Ordinary Stockholders’ Equity table on page 167.

 AIB response

 The accounting treatment for the consolidated statement of income and consolidated balance sheet items existing at the time of the sales transaction and for the current financial period: -

•

The accounting treatment at the time of the sales transaction

 3

 AIB’s US subsidiary, Allfirst, was acquired by M&T on April 1, 2003. AIB received 26.7 million M&T shares,
representing a stake of approximately 22.5% in the enlarged M&T, together with US$ 886.1 million in cash. The agreement allowed for the cash consideration to be reduced by the amount of the pre-close dividend from Allfirst to AIB and prior to
closing a dividend of US$ 865.0 million was declared and paid by Allfirst Financial Inc. Consequently, the cash consideration payable by M&T reduced to US$ 21.1 million.

 Under Irish GAAP, the transaction is accounted for in accordance with the Urgent Issues Task Force No. 31 ‘Exchanges of businesses or
other non-monetary assets for an interest in a subsidiary, joint venture or an associate’ (‘UITF 31’). Under UITF 31, the transaction is accounted for as an exchange of 77.5% of Allfirst for 22.5% of M&T pre-merger. Under this
approach, the 22.5% of Allfirst owned by AIB, both directly before the transaction and indirectly after, is treated as being owned throughout the transaction. The total recognized gains arising from the transaction amounted to €449 million
(after tax) with €489 million of a gain recognized in the statement of total recognized gains and losses (‘STRGL’) and €40 million of a loss recognized in the statement of income.

 From a US GAAP perspective, the transaction is accounted for under APB Opinion 29
‘Accounting for Non-Monetary transactions’, EITF Abstract No. 01-2, ‘Interpretations of APB No. 29’ and SFAS No. 141 ‘Business Combinations’. The gain on the disposal of Allfirst, calculated under US GAAP, differs from
that calculated under Irish GAAP primarily due to the different asset valuations and the different treatment of goodwill under Irish GAAP and US GAAP. The gain on disposal is shown in the income statement under US GAAP, whereas under Irish GAAP the
non-cash element of the gain was recognized in the STRGL.

•

The accounting treatment for the current financial period

 The differences between US and Irish GAAP with respect to the on-going accounting for our investment in M&T are as set out below. Under Irish GAAP and US GAAP the
investment in M&T is accounted using the Equity method. The following items describe adjustments that are booked at the investee level (M&T) in order for AIB to adjust its equity method accounting under Irish GAAP to equity method accounting
under US GAAP. The amounts disclosed below in respect of adjustments are calculated based on AIB’s 22.5% shareholding in M&T.

 a) Originated Mortgage Servicing Rights (OMSRs)

 M&T generate income from retaining the servicing rights on a portion of the mortgages they originate and subsequently sell on. Under US GAAP, the value of the OMSRs
is capitalized on the balance sheet. The OMSRs are then amortized to the income statement over the life of the loan.

 It is AIB policy under Irish GAAP not to recognize OMSRs. Consequently the capitalization and amortization of these servicing rights is reversed for the Irish GAAP
financial statements.

 In preparing its US GAAP reconciliation, AIB includes
the income and expense recognized by M&T on OMSRs within its share of income of associates. For the 2004 US GAAP reconciliation of net income, the capitalization of OMSRs generates an income of €5 million and the amortization of OMSRs
generates an expense of €6 million.

 b) Core deposit intangibles

 Under US GAAP, M&T recognizes core deposit intangibles on the
acquisition of subsidiary undertakings and amortizes these to the income statement.

 4

 It is AIB policy under Irish GAAP not to recognize core deposit intangibles. The amortization of the core deposit
intangibles generated by M&T on previous acquisitions is therefore reversed for the Irish GAAP financial statements.

 In preparing its US GAAP reconciliation, AIB includes the expense recognized by M&T on core deposit intangibles within its share of income of associates. For the 2004
US GAAP reconciliation of net income, the amortization of core deposit intangibles generates an expense of €11 million.

 c) Forward sale mortgage commitments

 Under US GAAP, M&T values its loan commitments at balance sheet date with any contracts to sell mortgages to third parties.

 Under Irish GAAP, it is AIB policy not to value its loan agreements.

 In preparing its US GAAP reconciliation, AIB includes the income recognized by M&T on
forward sale mortgage commitments within its share of income of associates. For the 2004 US GAAP reconciliation of net income, the recognition of forward sales mortgage commitments generates an income of €0.4 million.

 d) Pension schemes

 While recording of pension scheme assets and liabilities under US and Irish GAAP (FRS 17 – Retirement Benefits) is predominantly
similar, US GAAP allows the amortization of prior service cost and actuarial gains/losses, whereas FRS 17 does not. Consequently, AIB reverses such amortization by M&T when producing its financial statements under Irish GAAP.

 In preparing its US GAAP reconciliation, AIB includes the amortization of both the prior
service cost and actuarial gains/losses recognized by M&T within its share of income of associates. For the 2004 US GAAP reconciliation of net income, this amortization generates an expense of €0.2 million. As part of this adjustment, for
US GAAP AIB reverses the recognized actuarial loss arising in the STRGL under Irish GAAP, but recognized its share of any minimum pension liability recognized by M&T.

 e) Goodwill

 Under US GAAP (FAS 142), goodwill is not amortized but retained at its value and reviewed annually for impairment.

 It is AIB’s policy under Irish GAAP to amortize goodwill to the income statement over a
period of 20 years.

 In preparing its US GAAP reconciliation, AIB reverses any
goodwill amortization it has recorded under Irish GAAP within its share of income of associates. AIB also carries out an annual impairment review for goodwill. No impairment charge was required in respect of M&T for 2004 under US GAAP.
Accordingly, the 2004 US GAAP reconciliation of net income from associates gives rise to a US GAAP adjustment of €51 million.

 Explanations of how these differences relate to the Adjustments to Net Income table on page 165, the Consolidated Ordinary Stockholders’ Equity table on page 166,
and the Consolidated Total Assets table and Consolidated Total Liabilities and Ordinary Stockholders’ Equity table on page 167.

 5

•

Consolidated net income – page 165

 The differences as set out above have given rise to the following adjustments. The total amount is recorded as an adjustment within share of income of
associates.

2004

€m

 Goodwill amortization reversal

51

 Capitalization of OMSRs

5

 Amortization of OMSRs

(6
)

 Core deposit and other intangibles amortization

(11
)

 Total

39

 The related deferred
tax on the above share of income is €5 million positive and is included within ‘Deferred tax effect on the above adjustments’ on page 165.

•

Consolidated ordinary stockholders’ equity – page 166

 The adjustment to ordinary stockholders’ equity of €64 million comprises the cumulative effect of adjustments to share of income of associated
undertakings, for 2004 and 2003 and any foreign currency translation adjustment arising.

 Other recognized losses on associated undertakings of €18 million reflects AIB’s share of M&T’s unrealized losses on investment securities and minimum pension liability adjustment. This figure was
adjusted from that previously reported following the review of all US GAAP reconciliation entries – see response to Questions 3 & 4 and related disclosures in the Appendices.

 Deferred tax on the above adjustments, totaling €14 million positive is included in ‘Deferred tax effect on the
above adjustments’ caption in the reconciliation schedule.

•

‘Consolidated total assets’ on page 167

 ‘Investment in associated undertaking’ reflects the cumulative share of income and other recognized gains and losses to the balance sheet date.

2004

 Cumulative adjustment at December 31

€m

 Share of income of associated undertakings

64

 Share of other recognized loss in associated undertakings

(18
)

 Total

46

•

‘Consolidated Total Liabilities and Ordinary Stockholders’ Equity’ on page 167

 The cumulative share of income of associated undertakings of €64 million and share of other recognized loss in
associated undertakings of €18 million is included within the ‘Ordinary stockholders’ equity’ line and the deferred taxation of €14 million positive is included within the ‘Deferred taxation’ line.

 The nature of the investment in M&T and the criteria you use to apply the equity or
cost methods. Specifically discuss the amount of control AIB can enact on M&T policy and management decisions and the resulting impact on your accounting determinations for both Irish and US GAAP. Please refer to APB Opinion 18 paragraph 6 for
US GAAP;

 6

 AIB Group’s investment in M&T is strategic in nature and aids the Group in its objective of securing its
long-term position in US regional banking. The Group’s investment in M&T, under Irish and US GAAP, is accounted for using the equity method of accounting.

 Under Irish GAAP, Financial Reporting Standard 9 – ‘Associates and Joint Ventures’ (‘FRS 9’), an associate may be
accounted for under the equity method where: -

 ‘The investor has a
long-term interest and is actively involved, and influential, in the direction of its investee through its participation in policy decisions coverin