Allied Irish Banks, p.l.c. Acquisition of Bank Zachodni S.A.

DUBLIN, Ireland--(BUSINESS WIRE)--June 24, 1999--

Allied Irish Banks, p.l.c. ("AIB") [NYSE: AIB] today announced that it has reached an agreement with the State Treasury of the Republic of Poland under which its subsidiary AIB European Investments Limited will acquire an 80% shareholding in Bank Zachodni S.A. ("BZ") at a price of PLN 102 per share, giving a total consideration of PLN 2.285 billion (IR(pound) 443.7 million).

Commenting on the acquisition, Tom Mulcahy, AIB Group Chief Executive, said "This acquisition, which is marginally accretive on a cash EPS basis in 2000, represents a major step forward for AIB in Poland, allowing us to address a 6% share of the Polish financial services market and bringing us important regional market concentration. Our strategic shareholdings provide us with a significant presence in two of the strongest economic regions in Poland, at a time when Poland is experiencing solid economic growth."

"The acquisition of BZ arises as part of the privatization process for the state-owned, Polish banking sector, which started in the early 1990's, and for which only one further bank (PKO BP) remains to be privatized. AIB has been fortunate to become involved with the privatization of two of the 9 state-owned banks, BZ and WBK, the franchises of which are contiguous."

"We look forward to working with the management and staff of Bank Zachodni S.A. in the development of its excellent regional franchise."

BZ is based in southwest Poland, with total assets of PLN 8.1 billion and shareholders' equity of PLN 695 million at 31 December 1998. BZ has a market share in excess of 20% in its region and was the 9th largest bank in Poland in terms of total deposits at 31 December 1998. BZ, and AIB's existing subsidiary in Poland, WBK, both have strong regional market shares and if considered together, would be equivalent to the 6th largest banking group in Poland with a 20% plus share of both the west and southwest regional banking markets.

BZ is headquartered in Wroclaw and provides a range of retail and commercial banking services. It operates 182 outlets and 195 ATMs, and has 6,981 employees. BZ delivered an operating surplus of PLN 352 million in 1998 (an increase of 30% over 1997). Performance was adversely affected by exceptional bad debt provisions, resulting in profit before tax of PLN 119 million for the period.

AIB has committed to invest a further PLN 250 million (IR(pound)48.5 million) in BZ which, taken in conjunction with the purchase consideration, results in a price to book ratio of 3.3 times. The purchase consideration represents 4.1 times reported book value at 31 December 1998.

The purchase of BZ is conditional on Irish and Polish regulatory approvals. The acquisition is expected to close during the third quarter of 1999.

The acquisition will be funded from AIB's existing capital. On this basis, this transaction is expected to be marginally accretive for AIB's earnings per share on a cash basis in 2000. After goodwill amortisation, based on reported net assets at 31 December 1998, the basic earnings per share is modestly dilutive in 2000.

This announcement and a detailed informative presentation can be viewed on our internet site at www.aib.ie/investorrelations/home/ -0-

                                                    Appendix 1

Bank Zachodni S.A.

                                    PROFIT AND LOSS ACCOUNT
Year Ended:  31 December
PLN million

                                   1997         1998       % Growth
                                   ----         ----       --------

Net Interest Income                  424        481             13
Non-Interest Income                  177        257             45
                                     ---        ---
Total Income                         601        738             23
Non-Interest Expense                 331        386             17
                                     ---        ---
Operating Surplus                    270        352             30
Provisions                            29        233            713
                                      --        ---
Profit before tax                    241        119            (51)
Taxation                             100         92
                                     ---         --
Profit after tax                     141         27            (81)
                                     ===         ==

                                          BALANCE SHEET
Year ended:  31 December
PLN million

                                                1997            1998
                                                ----            ----

Cash & Balances with Central Bank                644             929
Loans to Banks                                   460             567
Investment Securities                            972           1,471
Loans (Net)                                    3,729           4,582
Other Assets                                     455             508
                                                 ---            ----
Total Assets                                   6,260           8,057
                                               =====           =====

Deposits from Banks                              296             520
Customer Deposits                              4,712           6,198
Borrowings                                         -               8
Other Liabilities                                530             636
Shareholders Equity                              722             695
                                                 ---             ---
Total Liabilities & Equity                     6,260           8,057
                                               =====           =====

Based on Polish Accounting Standards

Appendix II

Southwestern Poland

Background Data

A. Primary Regions

Population: In excess of 5 million

Main City: Wroclaw

B. General Economic Profile

- 12.5 to 13.5% of total Polish GDP

- Gross Regional product (GRP) growing by 0.5 - 1.0 percentage

points faster than Polish GDP

- One of the wealthiest regions (GRP per capita > PLN 7.000 per

annum)

- Well located in proximity to Germany, Czech Republic and main

trans-central European transportation routes

Wroclaw has been at the forefront of the economic transformation process and has a fast-growing, diversified economic base supported by good infrastructure and its position as a leading centre of higher education.

C. Regional Industrial Structure

- Significant Foreign Direct Investment ("FDI") from Germany, UK,

USA, Sweden and France

- Restructuring of traditional industries in progress

- Unemployment at 11.6% but falling due to regional growth rates

and FDI.

- Wroclaw, as major universities site, attracts most FDI

- Close trading links with Germany and rest of Poland

Growth Sectors

-- Manufacturing - Auto-related (Volvo, Volkswagen), computers -- Construction and building materials -- Food processing - Cadbury, Cargill -- Retailing - Tesco, Carrefour, IKEA -- Tourism

Traditional Sectors

-- Raw materials - Coal, copper and other minerals -- Power Generation -- Agriculture -- Textiles -- Chemicals

Special Economic Zones (SEZ's)

-- Region contains 3 of the country's 17 SEZ's -- Generous Tax incentives -- Counter decline of Traditional industries

D. Financial Services

-- Main Players - BZ and PKO BP (Both State owned)

-- Other players - Bank Handlowy, KredytBank PBI, Bank Slaski, BPH

and PEKAO S.A.

-- Retail deposits as key source of funding

-- Low Branch density - 25% of EU average

-- Scope for enhancing product range - developing automated

banking/card-based services and alliances with insurance

companies

-- Opportunities for using technology

-- Wholesale Banking - Developing Scenario