The overcharging by AIB between 1996 and April 2004 occurred in three separate categories of foreign exchange transaction, the bank said yesterday.

The bank said that the "stand alone calculation system" that is used to process foreign exchange transactions does not record the customers involved in the transactions.

Nor does it record transaction numbers that would allow the transaction to be traced to particular customers.

Mr John Hickey, general manager of retail banking, said the system does not record the numbers of the particular drafts or cheques that were issued as a result of a particular transaction. Receipts do not have customer information either.

It was for these reasons that the bank will find it difficult to identify the customers who were overcharged, he said.

Because the system records dates, currencies, exchange rates and amounts, it is possible to use the system to estimate the amount of overcharging likely to be at issue. The bank has estimated this to be €14 million.

Mr Hickey explained that banks charge a margin and a commission for foreign exchange transactions. The margin is built into the exchange rates so that a profit accrues to the bank. This accounts for the different "we buy, we sell" rates advertised by banks. A commission is a per transaction charge that is also levied by banks.

The current controversy concerns the size of the margin that was charged by AIB in the period 1996 to April 2004. A spokeswoman for the bank said the foreign exchange categories involved were:

The purchase by customers of foreign exchange drafts or travellers' cheques, excluding sterling, for amounts between £500 (€635) and £10,000.

The purchase by customers of sterling drafts or travellers cheques for amounts between £500 and £20,000.

Outward international payments by a customer in all currencies for amounts between £500 and £50,000. The bank spokeswoman said electronic payments would be included in the latter category.

The bank has said that the margin charged for these types of transactions was keyed into the bank's computer systems and then applied to the daily foreign exchange rates. In other words the system would calculate the daily exchange rates in such as way as to include the percentage margin that was being charged to customers.

The margin rate keyed into the system was 1 per cent while the rate authorised by the Office of Director of Consumer Affairs (ODCA) was 0.5 per cent.

The bank has said the overcharging was the result of human error and was a mistake. It said the margin inputted into the bank's system was not changed for the period 1996 to April 2004. The overcharging was rectified in mid-April 2004, when the issue was addressed as part of preparations for seeking authorisation for new rates.

"Margins are charged by all banks. However, our prices at the time were as cheap and in most cases cheaper than other banks," the spokeswoman said.

A source outside AIB said that most banks at the time were charging in and around 1 per cent for these transactions. The law in 1996, when ODCA took over responsibility for the charges from the Central Bank, was that the banks should notify the ODCA of the rates being charged. This constituted authorisation and it was not the case that the ODCA could refuse to accept the rate submitted.

The AIB spokeswoman said the bank would seek to identify the customers who had been charged more than the authorised rate and to repay them.