The European Commission is set this week to warn banks in two further European Union states it suspects they have been operating a cartel setting fees for changing euro area currencies, an EU official said yesterday. The Commission last month sent legal warnings - so-called "statements of objection" - to 120 banks and federations in Belgium, the Republic, Finland and Portugal.

It gave them until October to provide evidence to refute what it called "documentary evidence" of illegal price-fixing. "Statements of objections are due to go to banks in two other countries, probably this week," the official said, declining to say which countries were involved.

Announcing it had sent warnings to the first four countries last month, the Commission said it had "evidence of breach of EU competition rules concerning charges for exchanging eurozone currencies".

"The banks have until early October to reply, but they should be under no illusion that the Commission will severely punish any price-fixing arrangements which, if confirmed, would have undermined the launch of Europe's single currency," it added.

A "statement of objections" is a legal warning setting out what the Commission alleges and giving companies time to respond. The Commission will decide whether to press ahead with fines once it has studied their defence.

It can fine companies found guilty of anti-competitive practices up to 10 per cent of their annual sales. Fines are set according to the gravity of the infringement. The Commission regards the operation of a cartel as a "very serious" offence, for which the minimum fine is €20 million.