Minister for Finance Charlie McCreevy has said the fraud at AIB's US arm is damaging for AIB and the Irish economy.
He said both AIB and recently troubled pharmaceutical group Elan made up nearly 40% of the Irish stock market, and anything affecting either company had an impact on the stock market.
He said both were companies associated with Irish success and anything that affected them affected the image of Ireland.
But he said there was no danger of the AIB fraud damaging the overall stability of the bank, and this was a totally different situation from the collapse of the Insurance Corporation of Ireland in the 1980s.
He said while this was not a good day for pension funds, AIB would have only a small weighting in any fund manager's portfolio because they had diversified out of Irish equities into the European market.
He said the AIB situation was an illustration of why the National Pension Fund should not be overly focused on Irish investments.