IN a general atmosphere of optimism, some 700 Allied Irish Banks shareholders approved the company's £840 million purchase of the US bank Dauphin Deposit and applauded the progress of AIB since it was established 30 years ago. Some shareholders, however, criticised the bank's share option scheme for top management and expressed worries about the Millennium Bug.

"The focus now is on the next 30 years... a revolutionary new era of electronic business is dawning," the narrator of a corporate video told AIB's annual general meeting. The company's new chairman, Mr Lochlann Quinn, added that in the first four months of 1997, "trading is strong, and across each division performance is well ahead of last year".

Had one spent £1,000 on AIB shares in 1966, he added, the investment today would be worth £156,200, an annual return of 18 per cent assuming net dividends were reinvested on payment date.

"There are intrinsic reasons for AIB's present success," Mr Quinn continued. "We are developing a stronger sense of customers' requirements, which is being made possible by our number one position in banking technology applications in Ireland."

One shareholder, Mr Colm Wynne, agreed that the bank was heavily reliant on computer systems and said he was concerned about reports that the 2000 "Millennium Bug" could catch banks and their customers unawares and cost them dear.

Mr Quinn said AIB had carried out a detailed examination of the issue, and what its impact could be on the bank's computer processes. He gave a "ball park" cost figure of £20 million.

Another shareholder questioned whether the bank would suffer if retailers took the introduction of the single currency as an opportunity to impose a price rise. Mr Quinn said that, while there was legitimate concern that some shops would "round up" their prices, competition in the retail sector had never been more fierce, and this would maintain downward pressure on prices.

Another member said she was shocked when she read a newspaper report of profits on a share option sale of £280,000 made by AIB group general manager Mr Kevin Kelly. The profit was excessive and far beyond the reach of most ordinary shareholders, she said, demanding an explanation.

In reply, Mr Quinn said the stock option scheme adopted by the bank in recent years to reward and motivate top management allowed for such gains to be made. "We have no apology to make for the fact that people make money out of stock options - that's what they're there for," he added.