The on-going inquiries into the affairs of National Irish Bank are taking their toll on its operations amid signs that the investigations are already eating into profits. In court this week, the bank said it has been forced to spend £2.4 million to date to deal with the investigations, setting up a designated office to process customer queries and employing up to 65 staff to handle them on a full-time basis.

The bank has also given an assurance that any customers who have been overcharged will be paid a generous reimbursement. It has undertaken to take account of the interest lost over a period of years on any monies wrongfully taken by the bank and in its calculations to assume the funds would have otherwise attracted the highest rate of interest.

NIB executives continue to insist the bank's day-to-day business has been unaffected by the ongoing controversy. Nonetheless, it is concerned that the Tanaiste's most recent actions are damaging to it and could scare some of its customers away.

Apart from the time spent meeting the requests of the various High Court inspectors now trawling through its books, the workload of staff throughout the branch network has increased hugely. NIB chief executive, Grahame Savage, estimates that in some branches it has taken up to 55 working days for staff to investigate the fees charged over a three-month period on one account alone. The bank's fee-earning potential must surely be radically curtailed in the current environment, with staff attention in many branches unlikely to be primarily focused on bringing in new business and general customer service.

There was one glimmer of light amid the darkness this week, however, Mr Justice Shanley indicated in the High Court that if the allegations made against the bank in relation to the sale of insurance policies prove to be ill-founded, the court would order that NIB's costs in defending itself against them be reimbursed.