[Letterhead of Cleary, Gottlieb, Steen & Hamilton]











Writer's Direct Dial:  (212) 225-2540

                                    November 24, 1997


ALBANK Financial Corporation
10 North Pearl Street
Albany, New York  12207

Ladies and Gentlemen:

           We have acted as counsel to ALBANK Financial
Corporation, a Delaware corporation (the "Company"), and Sponsor
of ALBANK Capital Trust I, a Delaware statutory business trust
(the "Trust"), in connection with the Registration Statement on
Form S-4 of the Company and the Trust (the "Registration
Statement") filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), and amended today, in respect of (i) the
proposed issuance by the Trust of $50,000,000 aggregate
liquidation amount of 9.27% Capital Securities, Series B (the
"New Capital Securities") registered under the Securities Act in
exchange for up to $50,000,000 aggregate liquidation amount of
9.27% Capital Securities, Series A (the "Old Capital Securities")
and (ii) the proposed issuance by the Company to the Trust of
$51,547,000 aggregate principal amount of the Company's 9.27%
Junior Subordinated Deferrable Interest Debentures due 2027,
Series B (the "New Junior Subordinated Debentures") registered
under the Securities Act in exchange for up to $51,547,000
aggregate principal amount of the Company's 9.27% Junior
Subordinated Deferrable Interest Debentures due 2027, Series A
(the "Old Junior Subordinated Debentures"), all as more fully
described in the Registration Statement and the Prospectus
included as part of the Registration Statement.

           Our opinion is based on the Internal Revenue Code of
1986, as amended, U.S. Treasury regulations promulgated
thereunder, and administrative and judicial interpretations
thereof, all as of the date hereof and all of which are subject
to change, possibly on a retroactive





basis. In rendering this opinion, we are expressing our views
only as to the federal income tax laws of the United States of
America.

           Subject to the assumptions, qualifications and
conditions set forth herein, it is our opinion that the
discussion set forth in the Registration Statement under the
caption "Certain Federal Income Tax Consequences" fairly and
accurately summarizes the specific tax matters addressed therein,
based upon current law and the assumptions stated or referred to
therein.

           We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement, and to the use of our name
under the heading "Certain Federal Income Tax Consequences."

                               Very truly yours,

                               CLEARY, GOTTLIEB, STEEN & HAMILTON



                               By   /s/ Yaron Z. Reich
                                    -----------------------------
                                        Yaron Z. Reich, a Partner





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