AIB has said the latest overcharging scandal to hit the bank, this time involving student discounts, is the result of mistakes and not deliberate overcharging.

A spokesman for the bank said the €1.4 million in overcharging that has been identified in relation to its student schemes, would not mean the €25 million already deposited by the bank with the Irish Financial Services Regulatory Authority (IFSRA), and earmarked for customer compensation, would have to be increased.

In a short statement yesterday, AIB said approximately 34,000 customers or about 15 per cent of the total in the category concerned, were affected by this latest development. "The total involved before interest compensation is of the order of €1.4 million," it said.

The average amount is €41 per student. The issue, which goes back to the mid-1990s, emerged as part of the ongoing investigation of pricing across its product range, the bank said. "As part of the trawl, AIB has determined that certain advertised discounts, which were available to full-time third-level students and graduates, were not applied in all cases."

"AIB confirms that it is in a position to identify most cases where discounts were not applied and that refunds will be made as soon as possible."

It also said the investigation had identified cases where former third-level students and graduate customers received discounts for longer periods, and sometimes for larger amounts, than had been advertised. "AIB will not seek to recover these amounts, which are estimated at €400,000," it said.

The internal AIB investigation is being headed by the former comptroller and auditor general, Mr Laurie McDonnell, who is due to report at the end of this month. A spokeswoman for IFSRA, the financial regulator, said it would not be commenting on each issue as it emerged in the media but would wait until the report was presented.

IRSRA was notified of the student issue by AIB when it was discovered, the bank said yesterday. The bank's statement was issued following a series of questions from RTÉ.

One source said the failure to give the advertised discounts to the students occurred in error. Manual interventions were needed to the bank's computer system for the discounts to be given and this was done incorrectly, or not at all, in the cases concerned. It was not done as a matter of policy, the source said.

The bank lodged €25 million with IFSRA as part of its response to a series of scandals that hit the bank in May. The money is to be used to refund customers who were overcharged when using the bank's foreign-exchange services. The initial total for the overcharging was estimated by the bank to be €14 million. The investigation is also examining the bank's policy of automatically assigning payment protection policies to certain mortgage holders without their permission.

The bank is also facing allegations that some of its branches systematically charged incorrect foreign-exchange rates to customers, to boost profits.

In a statement to the stock exchange last month, the bank said it would provide €50 million in its annual accounts to cover the entire cost of the scandals. It said the amount to be reimbursed to customers was unlikely to differ materially from €25 million.

In a statement last night, the Irish Bank Officials Association said staff in AIB would be "saddened and disappointed to hear of these latest disclosures".

Fine Gael spokesman Mr Phil Hogan said the credibility of the Irish financial sector was being jeopardised by the scandals at AIB.