AIB and An Post have struck a deal which will allow An Post to provide over-the-counter banking transactions to AIB customers in 1,000 automated post office outlets. The bank has also guaranteed that it will maintain its current branch presence in rural Ireland for at least the next three to five years. The joint initiative, expected to be up and running by next summer, was welcomed yesterday by the Irish Bank Officials Association (IBOA), which represents some 6,000 AIB staff, describing the initiative as a good starting point. General secretary Mr Larry Broderick said he had received a firm commitment from AIB that there would be no job losses arising from the deal at branch level or in head office.

From next July, AIB customers will have access to An Post outlets for cash lodgements and withdrawals from their accounts. The alliance means the number of outlets handling basic over-the-counter transactions for AIB customers will increase to 1,280 from 280. There will be no additional cost to customers using the An Post service. AIB has no plans to extend the service to include paper transactions at this stage.

Personal customers will be able to make cash lodgements using Banklink cards and PIN validation or pre-printed lodgement forms. They will also be able to make cash withdrawals using an ATM card. Smaller cash-based business customers will be able to make cash and coin lodgements using pre-printed lodgement books at designated An Post outlets.

The Irish Small and Medium Enterprises Association (ISME) called the link-up "a win-win situation". ISME said the arrangement was a practical solution to the threatened closure of rural bank branches which would benefit all parties concerned. The association also said the link-up would provide depositors with longer opening hours and weekend banking facilities.

Mr Pat Delaney of the Small Firms Association said the initiative would greatly enhance the opportunity for rural small businesses to have an efficient and effective banking system. He estimated that 70,000 business customers would benefit from the new arrangements.

Mr Eugene Sheehy, managing director of AIB's operations in the Republic, said An Post had unrivalled nationwide reach and the capacity to take on additional business.

Mr Sheehy insisted that this was not a back door means of cutting back the branch network. "Our long-term business model is to maintain a strong community-based distribution network," he said.

An Post estimates that becoming an agent for AIB will bring an extra three million transactions per year to its network. Some 1,000 "service plus" automated post offices will provide the service for AIB customers. A further 900 post offices will not be participating in the link-up.

An Post initially approached AIB with the partnership idea six months ago. Mr John Hynes, group chief executive of An Post, said it would strengthen the position of the post office as a trusted intermediary.

The Minister for Public Enterprise, Ms O'Rourke, welcomed the new agency contract between the two institutions, saying it was a further vote of confidence in the post office network.