Allied Irish Banks could well be the textbook case for how a foreign banking institution can succeed in the United States.

In the early 1980s, the Dublin bank decided it was too dependent on its home market and wanted to be more than just Ireland's biggest bank.

Unlike the big multinational banks that headed for New York and Los Angeles and subsequently ran into big real estate and commercial loan problems, Allied Irish looked outside the major financial centers for a diversified mix of small and medium-size businesses.

Allied Irish settled on Baltimore-based First Maryland Bancorp, acquiring 43% in December 1983, an additional 6% over the next few years, and the balance in 1989 for an average 1.27 times book value.

"They chose their market well and they were cautious," said Brown Brothers Harriman banking analyst Raphael Soifer. "They're one of only three foreign banks, together with Royal Bank of Scotland and ABN Amro, that have had a good record in U.S. regional banking."

Jeremiah E. Casey, chairman of First Maryland and its parent's chief executive officer for the United States, likes to joke that Allied Irish's deliberate step-by-step acquisition was "one of the longest due diligences on record."

The Irish bank's original $520 million investment in the United States has paid off handsomely. As of yearend 1996, First Maryland Bancorp had $11 billion of assets. The pending acquisition of Dauphin Deposit Corp. in Pennsylvania for $1.36 billion would add $6 billion more, making First Maryland the 45th-largest bank in the country.

From its first move into the United States, Allied Irish has grown steadily and never suffered a loss. Mr. Casey cites two reasons for the kind of record that has eluded so many other entrants.

"We believed building market share was the single most critical element in our strategy, and spreading yourself thinly across a large area was not feasible," he said.

Secondly, the Irish-born banker pointed out, Allied Irish was careful to ensure that First Maryland would continue to run with a U.S. culture and local management.

"Resisting the temptation to interfere can be critical," Mr. Casey stated.

The results speak for themselves. Since 1990, net income at First Maryland has grown at a compound annual rate of 20%, from $44 million in 1990 to $132 million last year. Earnings from the United States, including wholesale operations in the New York branch, last year accounted for 27% of a total of 420.8 million Irish pounds ($673 million), while U.S. assets accounted for 35% of the group's total of $47 billion.

"We have definitely never set a size (limit) for acquisitions in the U.S.," Mr. Casey said. "Our main consideration will continue to be the quality of the business."

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