While the £90 million (€114 million) DIRT settlement paid by AIB to the Revenue is the biggest payment so far by a financial institution, the amount is less than the market had expected. A settlement of £100-£150 million was anticipated.

At AIB, the payment will be seen as the price necessary to put the DIRT saga behind the bank and allow it to move forward. In the context of its annual profits, the payment is tiny, representing about five weeks' profits after tax.

AIB produced full-year profits after tax last year of £892 million, or about £17 million a week. At that rate of profitability, the bank would generate profits to pay the DIRT settlement in just 5.3 weeks. But with pre-tax profits set to rise to about £988 million in the current year, the payment to the Revenue would amount to just 4.7 weeks' profits.

Estimates of AIB's potential DIRT bill with interest and penalties had ranged from £35 million to £150 million.

The eventual outcome followed a lengthy 15-month audit based on a wide sample of non-resident accounts at AIB branches throughout the Republic over the two relevant time periods: 1986-1987 to 1991-1992 and 1992-1993 to 1998-1999.

AIB consistently maintained it could not make a reliable estimate of the extent of its liability for DIRT, interest and penalties and no amount was provided in its accounts for its liability. The bank argued that it had an amnesty agreement with the Revenue under which DIRT liabilities on bogus non-resident accounts for the period 19861990 were written off. The Dail Committee of Public Accounts (PAC) inquiry into these accounts found no evidence of such an amnesty. So far the Revenue has raised £150 million - £90 million in interest and penalties and £60 million in DIRT - from five financial institutions because of bogus non-resident accounts. Audits are close to completion at 32 institutions.

Sources suggested the size of the AIB and other settlements indicated that the Revenue imposed some penalties on genuine non-resident accounts where documentation was not properly completed, in addition to interest and penalties on bogus non-resident accounts. The financial institutions had sought to reduce their Revenue bills by requesting that there would be no penalties on accounts which were opened by people who were genuinely non-resident, but where errors were made at the bank branch when the account was opened. The sources suggest the penalties on this type of account may well have been significantly less than the full interest and penalties applied to bogus non-resident accounts.