AIB'S hopes of retaining its position on the Euro Stoxx 50 index of blue-chip shares are becoming increasingly remote and have not been helped by the recent fall in the share price which has further depressed its market capitalisation.

Stoxx Limited, the company that operates the Euro Stoxx 50, will publish the list of companies that make the grade for the new index on August 19th and the bank is less and less likely to be among them.

Instead, the index is set to be dominated by companies that are leaders in their sector in Europe rather than the biggest player in their domestic market.

The change in the stock selection method used for compiling the index is aimed at improving transparency, providing greater predictability and a more regional focus, says Mr Scott Stark, Stoxx regional director for the UK, Ireland and the Nordic region.

"We are moving from a domestic focus to a one-region rule," he says.

Sector criteria will initially be applied in choosing the stocks but firms will then be chosen on the basis of their size - measured by their market capitalisation.

At present, AIB is ranked 61st on the Stoxx website listing the top European companies.

With 10 banks ahead of it on the list, it is unlikely to make the list on a sectoral basis either.

Mr Maurice Crowley, head of investor relations at AIB, says the possibility that the stock will fall out of the index has affected the share price in recent weeks but he says other factors have dragged it down as well.

"In general, the stock price has been affected by the perception of the Irish economy going forward. There is a section of the UK analyst and media community that expects the good times to stop rolling," he says.

He also points to the thin trading conditions currently prevailing on the stock market.

However, Mr Crowley concedes that, while it is not a cast-iron certainty, the recent fall in the value of the share price increases the likelihood that the company will be dropped from the index.

"It would be unfortunate for us but we take comfort from the fact that we are on all the other major stock indices," he said.

AIB is included on several of the larger indices including the FTSE Eurotop 300, the Morgan Stanley Capital International index and the wider Dow Jones indices.