Revelations: AIB has said it will investigate information sent to the Irish Financial Services Regulatory Authority (IFSRA) that suggested certain branches systematically raised charges in the early 1990s to boost profitability.
Yesterday evening, a bank spokeswoman confirmed that IFSRA had informed it about a memo sent to AIB branches by former general manager Mr Pat O'Mahony in 1991. The memo was circulated to branch managers. It said: "All branches are to strictly conform to screen rates only with immediate effect. There is to be no variance whatsoever."
A commentary on the memo was given to Mr Eddie Hobbs, the finance spokesman for the Consumer Association by what he described as a former mid-ranking bank manager. The individual involved does not wish to be identified, Mr Hobbs said. The commentary suggests that certain AIB branches manipulated the exchange rates to raise profits and that the memo was intended to tell them to end this practice.
IFSRA said yesterday that it had been aware of this issue for some time. It is understood to have been alerted to it in the past fortnight as part of its inquiry into AIB's overcharging of customers on foreign exchange transactions, which it has estimated amounts to €20 million.
An IFSRA spokesman said its investigation into the latest issue had been assisted by the information provided by the Consumers Association.
The commentary on the memo suggests that, if a branch of AIB was failing to achieve its profit targets, certain officials adjusted the rate of exchange offered and overcharged customers.
This fresh allegation implies that where, for instance, the bank advertised that it was charging a rate of exchange of 1.19 for converting dollars to euro, a rate of 1.19999 would be entered into its foreign exchange conversion machines to make more money from its customers.
In today's money, if a customer converted $10,000 at the correct rate of 1.19, it would amount to €8,403.36. If the same amount was converted using the adjusted rate, the customer would receive €8,333.34, or €70 less. The additional profits earned from this practice would be used to boost those branches' contribution to AIB's profits, the former manager claimed.
An AIB spokeswoman said the bank would investigate whether the memo was "genuine" and the nature of its contents.
Last month the bank admitted that it had incorrectly charged a rate of commission of one percentage point on certain foreign exchange transactions when it only had approval to charge a rate of 0.5 of a percentage point.
