The Irish personal loan market has emerged as the third most expensive in a survey of 29 banks in eight EU states. The report by research firm Strategic Solutions said there were opportunities for price reductions in the personal loan and credit card markets.

Although profit margins in the Irish credit card business were the second-largest of the markets surveyed, the report warned that interest rates "may not reduce further until market penetration levels in Ireland rise".

But the study, which was commissioned by Bank of Ireland, said the three Irish banks surveyed had the lowest average mortgage interest rates.

Bank of Ireland, Allied Irish Bank and Ulster Bank took part in the survey, which also assessed the charges of major banks in Britain, France, Germany, Italy, the Netherlands, Spain and Portugal.

The mortgage rates surveyed were national averages, calculated by combining annual average variable and fixed rates between 1994 and February 2000.

The average Irish rate was 4.2 per cent in 1999, compared with an average charge of all states surveyed of 5.1 per cent. In the first two months of 2000, the average Irish rate was 4.5 per cent, compared with a survey average of 5.9 per cent. Irish banks had the second-lowest margins on mortgages.

Charges to set up standing orders at Irish banks were the third-most expensive in the survey. And the report said average foreign exchange commission charged by the Irish banks, 2.6 per cent, was above the sample average of 2 per cent.

Overall, German banks were the most expensive and those in France and the Netherlands charged the least.