CORPORATE GOVERNANCE STATEMENT

The Directors of the Bank are committed to maintaining the highest standards of corporate governance and, in particular, have regard to the principles set out in 'The Combined Code on Corporate Governance' published in July 2003 and revised in June 2006.

This Corporate Governance statement describes how the Bank applies the principles of the Combined Code and comments on its compliance with the Code's provisions. Except where stated, the Directors believe that the Group has complied fully with the provisions of the Combined Code throughout the financial year ended 30 September 2007.

The Board of Directors is responsible for the leadership, direction and control of the Bank and the Group and is accountable to the shareholders for financial performance. It delegates the management and day-to-day running of the Bank to the Group Chief Executive and senior management. As at 30 September 2007, the Board consisted of thirteen members, eight of whom are Non-executive Directors. There were eight scheduled meetings of the Board during the financial year. Details of attendance by Directors at scheduled meetings of the Board and its Committees during the year ended 30 September 2007 are set out on page 37 of the Annual Report 2007. The Board is provided with relevant papers in advance of meetings to enable it to carry out its duties. It receives regular management reports and information on corporate and business issues to enable reviews of performance against business targets and objectives.

The Board keeps a formal schedule of matters specifically reserved for its decision. These include agreement of strategic objectives, annual plans and performance targets, monitoring and control of operations, review of the performance of Board Committees and approval of specific senior appointments.

Ned Sullivan is the Senior Independent Non-executive Director. The Non-executive Directors are independent of management and have varied backgrounds, skills and experience. All Directors bring independent judgement to bear on issues of strategy, performance, resources, key appointments and standards of conduct.

The Bank has insurance for Directors and Officers which covers legal actions brought against them in the course of their duties.

A short biographical note on each Director is set out on page 21 of the Annual Report 2007.

The distinct and separate roles of the Chairman and Group Chief Executive are set out in writing and have been approved by the Board. There is a clear division of responsibilities.

The Chairman promotes continuing high standards of corporate governance and ensures there is effective communication with shareholders. He is responsible for the leadership and effectiveness of the Board and the Non-executive Directors in particular.

The Group Chief Executive provides leadership through his management of the day-to-day operations of the Bank and his advice to the Board. He has the central role in maintaining and enhancing a culture of high performance and motivation in the Bank. Together with the Group Finance Director, the Group Chief Executive has responsibility for ongoing relationships with shareholders.

The Board is satisfied that each of the Non-executive Directors is independent. In reaching that conclusion, the Board took into account a number of factors that might appear to affect the independence of some of the Directors, including length of service on the Board and cross-directorships. In each case, the Board is completely satisfied that the independence of the relevant Directors is not compromised.

Directors are appointed initially for three years and there is an expectation of a further such term assuming satisfactory performance. In individual cases, the appointment may be further extended subject to a rigorous review of performance. A robust and transparent procedure is in place for the appointment of new Directors.

Appointments to the Board are made based on merit and using objective criteria. The terms and conditions of appointment of Non-executive Directors are available for inspection at the registered office during normal business hours, and at the Annual General Meeting.

All Directors are provided with induction on appointment and update and refresh their skills and knowledge on an ongoing basis. This includes a particular focus on ensuring the Non-executive Directors are fully informed on issues of relevance to the Bank and its operations. The induction process includes an opportunity for new Non-executive Directors to meet major shareholders.

Furthermore, the Bank will facilitate major shareholders who wish to meet any new Non-executive Director.

The Directors can avail of the advice and services of the Group Company Secretary who ensures that Board procedures are followed and that there is compliance with applicable rules and regulations. The Directors and Committees of the Board can seek independent professional advice, if required, at the Bank's expense.

The Chairman conducts evaluations of the performance of the Board, individual Directors and Board Committees annually. In addition, the Board and its Committees undertake an annual evaluation of their performance and report their findings and any resulting recommendations to the Board. In order to enhance the evaluation process, the Board and its Committees have occasionally used external consultants.

An evaluation of the performance of the Chairman is conducted by the Senior Independent Non-executive Director, taking into account the views of the other Directors.

At least once a year, the Chairman meets with the Non-executive Directors without the Executive Directors and also has a private discussion with every Director on a wide range of issues affecting the Group, including any matters which the Directors, individually, wish to raise. Each Director discusses his or her own performance with the Chairman.

The Board discusses the results of its evaluations and uses the process to constructively improve the effectiveness of the Board.

One third of the Directors are required to retire at every Annual General Meeting. Consequently, every Director must submit themselves for re-election at least once every three years. New Directors are proposed for re-election at the Annual General Meeting following their appointment.

Whilst not strictly in line with the Combined Code, Michael Jacob, who has served more than nine years as a Non-executive Director, was not proposed for re-election by the Board in 2007 as he had been put forward for re-election in both 2005 and 2006.

The names of Directors submitted for election or re-election are accompanied by biographical and other details in order to allow shareholders to make an informed decision.

There are four Board Committees and each has specific terms of reference, which are reviewed annually. The Committees' terms of reference, setting out roles and responsibilities, are available on request through the Group Company Secretary and on the Bank's website.

Members: Ned Sullivan (Chairman), Sean FitzPatrick, Anne Heraty and Gary McGann.

The Committee is responsible for the formulation of the Group's policy on remuneration in relation to all Executive Directors and other senior executives. The Committee's report on behalf of the Board on Directors' remuneration and interests is set out in note 53 to the financial statements. All members of the Remuneration Committee are Non-executive Directors. The Chairman of the Bank is a member of the Remuneration Committee as permitted by the revised Combined Code on Corporate Governance, published in June 2006.

Terms of Reference for the Remuneration Committee (.pdf, 19 KB)

Members: Gary McGann (Chairman), Michael Jacob and Noël Harwerth.

The Audit Committee receives reports on various aspects of control. It reviews the Group's financial statements, the scope of the audits and the plans, findings and recommendations of the Group internal and external Auditors.

The Audit Committee has unrestricted access to both the Group internal and external Auditors and meets privately with the external Auditors at least once each year. The independence and objectivity of the external Auditors is safeguarded by the Audit Committee's pre-approval of all non-audit services.

Terms of Reference for Audit Committee (.pdf, 50KB)

Members: Fintan Drury (Chairman), Lar Bradshaw and Ned Sullivan.

The Risk and Compliance Committee's role is to oversee risk management and compliance. It reviews, on behalf of the Board, the key risks and compliance issues inherent in the business and the system of internal control necessary to manage them, and presents its findings to the Board.

Terms of Reference for Risk and Compliance Committee (.pdf, 34 KB)

Members: Anne Heraty (Chairman), Lar Bradshaw, David Drumm, Fintan Drury and Sean FitzPatrick.

This Committee is responsible for recommending candidates to the Board for appointment as Directors and ensuring a suitable induction programme is in place for all new Directors. It regularly reviews the Board's structure, size, composition, balance and succession plans and encourages the establishment of formal management development programmes. External search consultants were used in the process leading to the appointment of Noël Harwerth as a Non-executive Director.

Terms of Reference for Nominations and Succession Committee (.pdf, 19 KB)

The Directors acknowledge their overall responsibility for the Group's system of internal control and for reviewing its effectiveness. The system is designed to manage rather than eliminate the risk of failure to achieve the Group's business objectives and provides reasonable but not absolute assurance against material financial misstatement or loss. Such losses could arise because of the nature of the Group's business in undertaking a wide range of financial services that inherently involve varying degrees of risk.

The Board confirms that, during the year under review and up to the date of approval of the annual report and financial statements, there was in place an ongoing process for identifying, evaluating and managing the significant risks faced by the Group and that this process is regularly reviewed by the Board and accords with the Financial Reporting Council's revised guidance on Internal Control. The Group's system of internal control includes:

• An organisation structure with clearly defined authority limits and reporting mechanisms to higher levels of management and to the Board, which supports the maintenance of a strong control environment;
• A Group Risk Management function and a Group Compliance function with responsibility for ensuring that risks are identified, assessed and managed throughout the Group. The Group Credit Committee together with the Group Asset and Liability Committee provide support to the Audit Committee and the Risk and Compliance Committee in ensuring that efficient procedures are in place to manage risk;
• An annual budgeting and monthly financial reporting system for all Group business units which enables progress against plans to be monitored, trends to be evaluated and variances to be acted upon; and
• A comprehensive set of policies and guidelines relating to capital expenditure, computer security, business continuity planning, asset and liability management (including interest, currency and liquidity risk), operational risk management, credit risk management and compliance.

The Group Internal Audit function reports to the Group Chief Executive and the Audit Committee. It helps the Group accomplish its objectives by bringing a systematic and disciplined approach to evaluating and improving the effectiveness of the risk management, control and governance processes.

The system of internal control, which is embedded within the operations of the Group, is reviewed by Group Internal Audit. Emphasis is focused on areas of greatest risk as identified by risk analysis. In addition, the internal control systems are subject to regulatory supervision by the Financial Regulator and other overseas regulators.

The Audit Committee and the Risk and Compliance Committee review the effectiveness of the Group's internal controls annually. This involves reviewing the work and the reports of the Group Internal Audit, Risk Management and Compliance functions and establishing that appropriate action is being taken by management to address issues highlighted. The Audit Committee also meets with and receives reports from the external Auditors.

Following each meeting of the Audit Committee and the Risk and Compliance Committee, the Committee Chairmen report to the Board and minutes of such meetings are circulated to all members of the Board.

The Directors confirm that, with the assistance of reports from the Audit Committee and the Risk and Compliance Committee, they have reviewed, in accordance with the Combined Code, the effectiveness of the systems of internal control in existence in the Group for the year ended 30 September 2007 and for the period up to and including the date of approval of the financial statements. The review undertaken covers all aspects of control including financial, operational and compliance controls and risk management.

The Directors confirm that they are satisfied that the Bank and the Group have adequate resources to continue to operate for the foreseeable future and are financially sound. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

The Group gives relations with shareholders a high priority. The Directors are kept informed on shareholder relations through regular reports to the Board by the Group Chief Executive and Group Finance Director and through feedback from shareholders, brokers and investment bankers. There is regular dialogue with individual institutional shareholders, financial analysts and brokers and presentations are given at the time of major announcements, which provide opportunities for Directors to hear the views of shareholders directly.

All shareholders are invited to attend the Annual General Meeting and to participate in proceedings. Notice is sent to shareholders at least twenty working days in advance of the meeting. At the Annual General Meeting, separate resolutions are proposed on each substantially separate issue. When an issue has been determined at the meeting on a show of hands, the Chairman indicates to the meeting the number and proportion of proxy votes for, against and abstaining from that resolution. The Chairmen of the Remuneration Committee, Audit Committee, Risk and Compliance Committee and Nomination and Succession Committee are available to answer relevant questions at the Annual General Meeting.

The Group uses its internet site (www.angloirishbank.com) to provide investors with the full text of each annual and interim report for the previous five years, and copies of presentations to analysts and investors. Annual and interim results presentations are broadcast live via the internet to facilitate as many shareholders as possible receiving the information at the same time. In addition, shareholders can choose to receive reports and Annual General Meeting documents electronically rather than by post.

The website also provides detailed financial data, Bank information, information on credit ratings and all Stock Exchange and other press releases.

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