AIB recorded a 15 per cent increase in banking fees and commissions during 2002, according to its preliminary results.

However, this resulted from increased volumes in business and significant loan growth, according to the bank.

Charges on personal and business accounts compare favourably to charges in other EU states, including the UK, according to the Office of the Director of Consumer Affairs (ODCA).

A 2001 survey by the European Commission showed it cost less on average to withdraw money from cashpoints in Ireland than it did in any other European state. Ireland was also below the EU average for exchanging foreign banknotes. However, Irish banks, including AIB, charge for regular transactions, unlike most banks in the UK.

For personal customers, AIB charges a quarterly maintenance fee of €4.50 on its current account, with charges of €0.20 on automated transactions and €0.30 on paper or staff-assisted transactions. There is a maintenance fee of €15.24 for online accounts.

Students and people over the age of 60 are exempt and these transaction fees can be avoided if customers maintain a minimum credit balance of €500 in their accounts throughout the fee-charging period.

In the UK, very few ordinary customers pay transaction charges when their account is in credit. Most banks, including the "Big Four" of Barclays, HSBC, Lloyds TSB and NatWest, do not charge for transactions at any time.

Many UK banks also do not charge fees on authorised overdrafts. AIB has a facility charge of €25.39 per overdraft sanction.

Banks must obtain approval from the ODCA to increase bank charges. Mr Pat Delaney, director of the Small Firms Association, said charges for business customers were competitive relative to other EU countries because they were "very vigorously controlled" by the ODCA.

The Irish Bankers' Federation (IBF) is lobbying to remove this obligation.

"Certainly, there would be an effect on bank charges if that were to happen," the Director of Consumer Affairs, Ms Carmel Foley, said yesterday.

IBF president Mr Donal Forde, who is head of AIB's retail banking operations in the Republic, has suggested the requirement forces the banks to recover costs through means such as higher margins on mortgage and other interest rates.