Last week the operation, in which AIB has a roughly 70% holding, reported net income of 46m for the first quarter of the year . . . better than expected and an extra tick on the report card as the annual general meeting was held in Cork on Wednesday.

But even as Bank Zachodni WBK pulls its weight, it faces renewed pressure in Poland. Italian-owned Unicredit finally received clearance less than two weeks ago to merge two Polish operations, Pekao and BHP, the country's second- and third-largest banks. Unicredit formally acquired Germany's HVB Group last year for 21bn. The latter owned BHP, and Unicredit wanted to merge the two Polish operations.

Following disagreements with the Polish government, it finally agreed to sell 200 of BHP's 480 branches, sell the BHP brand and an investment fund.

The move will create Poland's secondlargest bank. The Polish government owns the largest, PKO Bank Polski.

Unicredit plans a bigger assault on Poland, hoping to boost business in the most populated country to have joined the European Union in the accession round of 2004.

Despite Unicredit having to put branches up for sale, Bank Zachodni may not be interested in any purchases. Last week its president, Jacek Ksen, said the bank will open more than 40 small and medium-sized branches this year, mainly around Warsaw, near the Baltic coast, and also in the southwestern province of Silesia.

For AIB, its foray into Poland proves that Irish banks can hack it abroad, at least sometimes. But a legacy of offloaded foreign investments underlines that markets can be misread, and you just never know, of course, when an employee is going to defraud you of almost $700m, as trader John Rusnak did at AIB's Allfirst subsidiary, which was later sold to New York-based M&T, in which AIB now has a 22% stake.

Both Bank of Ireland and AIB have felt the pain Stateside, the former with its First New Hampshire Banks operation that it acquired in 1988 for $370m.

By 1991 Bank of Ireland had invested an additional $145m in capital to ensure the US subsidiary remained eligible to bid for other assets. The bank was hurt, however, by bad mortgage debts that helped generate an annual loss of over $96m in 1990. High inflation and interest rates saw the number of small banking operations around the US dwindle. From 1980 to 1994, New Hampshire was one of the six states with the highest number of bank failures. During that period, 16 banks closed with $3.3bn in assets, representing 32% of the state's total banking assets.

First New Hampshire Banks acquired two other banking operations, Amoskeag Bank and Bankeast Corporation, in 1991. Bank of Ireland sold the New Hampshire subsidiary in 1995 to Citizens, a subsidiary of RBS.

But analysts say that while it is easy to point to failures, it is notoriously difficult for banks to expand beyond their own borders.

"The one thing about successful retail banks is that they all have scale in their local markets, " said analyst David Odlum of NCB. "But very few banks have been successful internationally, so Irish banks aren't alone, " he added, citing only a very small number of players such as HSBC and Citigroup that are global players.

Irish banks may have tried to be "all things to all people" when they initially took on acquisitions abroad, according to Odlum, but lessons have now been learned.

"I think it's a very difficult route to go down, " Odlum said. "Irish Life, for instance, was very brave, and put its hands up and said: 'Ireland first'."

Irish Life and Permanent sold most of its overseas operations, including a minority stake in Hungary's Kereskedelmi es Hitelbank, which had been acquired in 1997 and sold in 1999 after Irish Life and Irish Permanent merged. It also sold assets in the UK, while in 2001 it sold its Interstate and First Variable business in the US.

It was the weakness of the Irish economy that coaxed Bank of Ireland into buying its doomed New Hampshire operation in 1988. Earnings growth had to be found somewhere if it couldn't be generated at home. With the home economy now cycled in a long-term boom, the urgency of seeking out foreign acquisitions all but evaporated, apart from some strategic, niche buys.

"I think part of the reason the Irish banks have done much better at home is that the Irish market has been particularly strong in recent years, " said Stuart Draper, head of research at Dolmen Securities, adding that Irish banks have been able to capitalise on the fact that they know their domestic customers perhaps better than they could ever hope to know foreign-based retail ones.

"Sometimes when a bank expands externally, management control can be stretched, while a lack of detailed knowledge regarding credit risk can also make it a more difficult proposition, " he added.

However, a slow, steady infiltration can work. Anglo Irish Bank has been gradually increasing its exposure in the US, providing finance for property acquisitions to both Irish and US nationals. It is a strategy that has been working well.

"I think Anglo's structure seems to be very entrepreneurial, " said David Odlum. "What it has achieved in the past 10 or 15 years has been phenomenal in Ireland and that gave it momentum in the UK too."

While the US has not been a shining success story for some Irish institutions, the UK has been somewhat kinder, for the most part. For AIB, Bank of Ireland and Anglo Irish Bank, the market has proved a good performer on the business banking side.

From a retail point of view, Bank of Ireland sold the branch network of Bristol & West last year, but retained the right to use the name to sell mortgages there.

The jury remains out on Bank of Ireland's joint venture with the UK Post Office. Although a broad suite of products is now offered through the post office network by Bank of Ireland, the venture still has to turn a profit and the break-even date has been pushed farther into the future.

"You would think the banking business would be fairly generic across the world, " said one Dublin analyst who didn't wish to be named. "But local knowledge is very important, and even if you find a successful business model, it doesn't always translate to other markets, " he added. With continued growth in Ireland, the banks can "stick to the knitting" at home, he said, while looking for niche acquisitions abroad.

Hardly niche, AIB's Polish operations are already proving a shrewd investment. Even with greater competition, the operation could ultimately be one that restores faith in foreign markets.