Ireland's AIB drops plans to make many branches cashless

DUBLIN (Reuters) - Allied Irish Banks on Friday shelved plans to drop cash services in 70 of its 170 branches after a major political backlash against the decision over its likely impact on small businesses and rural communities.

The bank, which is 63% owned by the government and is the country's largest mortgage lender, announced the plan on Tuesday, saying that the cost of providing cash services was becoming "increasingly unsustainable."

But it reversed course after days of sustained criticism from politicians and small business owners, which culminated in Prime Minister Micheal Martin calling on the bank to "reflect on" its decision.

"Recognising the customer and public unease that this has caused, AIB has decided not to proceed with the proposed changes," the bank said in a statement.

Finance Minister Paschal Donohoe, who is gradually reducing the state's stake in the bank, welcomed the move, saying banks have a "key role in ... ensuring appropriate access to retail banking services for all in society, including the vulnerable."

(Writing by Conor Humphries, Editing by Louise Heavens)