The following is an internal memo which was circulated to staff yesterday, following The Irish Times story that AIB's outgoing chief executive Michael Buckley proposed selling the bank to M&T bank in the US, last year.

Dear Colleague

AIB Strategy 2005-2010

A front page report in this morning's Irish Times, taken up on radio, said that the board of AIB considered last autumn a possible merger between our bank and M&T, in which we have a 23 per cent stake.

There was such a discussion at the board.

I presented the board with a paper which indicated two plausible long-term strategic scenarios for AIB. One would be quickly to create a much bigger and financially stronger transatlantic bank by merging AIB and M&T. The other would be to continue to pursue a standalone strategy focused on our existing strong position in Ireland, the UK and Poland.

After a debate, there was a very strong consensus by the full board to choose the second approach. This will see the bank grow as a strong, independent European financial institution, which will continue to have a presence in the US, both through our direct corporate banking activities and through our shareholding in M&T.

The group executive then spent a considerable amount of time together in the final quarter of 2004 developing a more detailed long-term strategy on that basis, which I presented to the board in January and which the board adopted.

Developing a long-term strategy involves looking at a range of different options in order to choose the one most appropriate to the character and nature of an organisation, its employees, customers and shareholders.

Over time, we have looked at a range of different future growth scenarios.

The role of the chief executive in this context is to be challenging of the status quo, to develop different scenarios and to bring about an open debate on the strengths and weaknesses of each.

This is exactly what occurred. Initially the scenarios were debated at the group executive. They favoured the standalone scenario but it was decided that both scenarios would be presented to the board. The chairman facilitated the debate at the board but he did not sponsor the merger scenario.

When I brought the scenarios forward for discussion by the board last autumn we were still dealing with the regulatory matters arising from the foreign exchange charges and related issues. However, neither of the long-term scenarios were influenced by those regulatory matters. These were two separate issues.

Finally, in bringing these scenarios to the board, I wanted to make sure that all options were explored before agreement was reached on what would constitute a robust long-term plan for the continued growth and development of AIB - a plan around which the management team and the board were united. That plan is now based on board and management commitment to an independent future for AIB in the long term.

Michael Buckley

AIB Group chief executive