AIB shares jumped 5p to a record high of 503p yesterday after it became the first Irish bank to get an Aa3 financial strength rating from creditrating agency Moody's Investors Services.

AIB's new rating is the fourth highest rating of financial strength that Moody's can award. AIB joined the Bank of Scotland, the Royal Bank of Scotland and other international banks at the Aa3 rating level.

Moody's analyst, Mr Alan Reid said he upgraded his rating for AIB's long term deposits and senior debt from Al to Aa3 to reflect its "core strength and strong financial fundamentals".

The upgrading reflects AIB's strong franchise in its domestic retail and corporate markets and its position in the US and in Britain, he said.

AIB has "a nice mix of business throughout the group", he said. Moody's expects the strong recurring - earnings trend to continue "as a result of the healthy Irish economy". AIB should be able to continue to invest further in the development of its franchise and, at the same time, reinforce core capitalisation, he said.

Mr Reid said he would carefully monitor AIB's acquisition policy because its retained profits would be increasing while opportunities in its domestic market were limited.

AIB group chief executive, Mr Tom Mulcahy described the new rating was "a major achievement". It would reduce the bank's cost of debt and loan capital and increase its ability to do business with major international corporations, he said. AIB yesterday announced that group financial director, Mr Gary Kennedy had been appointed to the groups board while Mr Tom Cavanagh had retired after 18 years service as a non executive director.

Meanwhile, shares in Bank of Ireland fell 9p to 744p yesterday. Bank of Ireland was placed on review by Moody's for possible downgrading when its Bristol & West acquisition was announced. Mr Reid said he would continue to monitor Bank of Ireland.