National Irish Bank (NIB) has written to its customers to reassure them of its commitment to the highest standards and best practices in banking.

The letters were sent out on a phased basis from last Thursday and were signed by NIB's chief operating officer, Mr Philip Halpin. He said he wanted to take the opportunity to write directly to customers in order to give them an understanding of the facts, the internal actions that have been taken and the information channels open to them.

"The Bank has treated the various recent media allegations with the utmost seriousness. Arthur Andersen has been appointed to independently investigate the interest and fee allegations within National Irish Bank.

"National Australia Group's internal auditors and compliance officers are also investigating the matter. Any customer found to have been incorrectly charged will be compensated," the letter said.

The inquiry by Arthur Andersen into overcharging, which an internal NIB audit uncovered at three of its branches, has only just begun. The investigation, which was commissioned by NIB's parent and was expected to have produced a status report by Easter, has been delayed by the various investigations currently going on at the bank.

Mr Halpin also thanked customers who had expressed their support to staff and said it was very much appreciated "at this difficult time".

Meanwhile, a working group established by the Minister for Finance, Mr McCreevy, to examine "the law and practice governing the provision of financial services in Ireland" has already met twice and is making progress. The working group was set up following the revelations of overcharging practices at certain branches of National Irish Bank and is due to report back to Mr McCreevy by mid-May. The committee is made up of five members including two senior officials from the Department of Finance, a Central Bank official, a representative of the Department of Enterprise, Trade and Employment and the Director of Consumer Affairs, Mr William Fagan.

In a separate development, the British-based research and consultancy firm Datamonitor, which recently published a survey showing Irish banks had the highest interest margins in Europe, has published new figures revealing why.

Although interest income for Irish banks fell by 3.3 per cent between 1992 and 1996, the interest paid to depositors dropped by 19.4 per cent over the same period, Datamonitor says.

"Irish banks' profit margins have increased as the rate at which they have lowered interest rates paid to savers is not in proportion to overall declining interest rates," it says.