The Minister for Finance, Mr Cowen, warned top bankers yesterday that they had to safeguard their industry against the risks posed to its reputation.

Addressing an audience of senior banking executives in the National College of Ireland (NCI), Mr Cowen said that along with the conventional risks that their business faces, financial institutions also had to deal with the threat of "reputational risk".

"This is the risk that developments will arise, or practices will be engaged in, which will undermine the standing of an institution in dealing with its customers, who will be less willing to use that institution," he said.

"A recent Pricewaterhouse study suggested that, internationally, reputational risk is now regarded as the greatest threat to an organisation's market value."

Mr Cowen's warning came just days after the Irish Financial Services Regulation Authority (IFSRA) investigation of recent scandals at the State's biggest bank, AIB, found that some of its staff and management deliberately tried to hide the fact that it overcharged thousands of foreign exchange customers by €32.4 million over eight years.

The authority also found that the bank's investment arm faked deals to artificially swell the accounts of clients that it wanted to impress. IFSRA described that practice as "unacceptable".

Separately, the State's biggest mortgage lender, Permanent TSB, recently began the process of repaying €400 each to 1,500 customers after an internal audit found that they had been overcharged interest.

Mr Cowen said yesterday that the best way to protect against "reputational risk" was for institutions to ensure high standards of professional conduct in dealing with clients.

"As a new finance minister, though not a new minister, I want you to know that I am happy to champion the cause of Ireland as a centre for financial services," he said. "I am happy to promote our industry as a provider of services internationally.

"But I will never be an apologist for bad service to consumers, or for practices that put at risk the reputation not just of individual institutions, but of the Irish financial services industry at large."

Mr Cowen was giving the inaugural lecture in the Leaders in Financial Services series, organised by NCI. The Minister also welcomed the publication of the Competition Authority's study of the Republic's banking sector. The report found that consumers and business were paying for the lack of competition in the sector, and recommended 40 measures needed to tackle the problem.

"The report's overall conclusion that there are competitive issues to be addressed in the banking sector, leading to high costs for customers, must be taken seriously," Mr Cowen said.