AIB plans to show penalty interest separately on customer statements from June this year as part of its response to the recent controversy about overcharging in the banking industry. Penalty or excess interest is charged to customers who breach previously agreed limits on their accounts.

The chairman, Mr Lochlann Quinn, told some 600 shareholders at the bank's annual meeting in Dublin yesterday that the recent controversy about overcharging had been "a major concern" to AIB and it had looked into the matter of fees and charging in great detail since the controversy first broke.

"I can tell you there is no evidence to suggest that AIB has been involved in any kind of overcharging," he said.

However, the bank could not say that individual mistakes never happened. "Every day we process millions of transactions. When there are errors, we aim to correct them as quickly as possible."

One AIB shareholder said she had become "cynical and disillusioned" with the banks and was trying to find somewhere else to put her money. But Mr Quinn said 99 per cent of banking going on in Ireland was "quality banking" and she could "absolutely trust" AIB with her money.

AIB also plans to have a special helpline offering advice on statement queries.

Regarding the subject of bogus non-resident accounts, Mr Quinn said these became a growing feature of the financial system in the 1970s and 1980s. Although many of these accounts were valid, the system was abused and the problem was a national one and not just confined to AIB.

He said he could not confirm that 53,000 such accounts, containing some £600 million, were hidden in the bank at one stage, saying this was just a "guesstimate" and it was impossible to exactly quantify either the number of accounts or the amount of money involved.

However, Mr Quinn admitted that there were a large number of such accounts but said it was difficult, if not impossible, for any one institution to solve the problem which was eventually resolved on a national basis. The rigorous procedures now in place mean it will not happen again, Mr Quinn said.

"There was a problem here. It was recognised and it was dealt with."

Mr Quinn said no settlement on its behalf had been made by AIB with the Revenue Commissioners. As part of the solution of the non-resident account issue, DIRT (deposit interest retention tax) payments made by AIB on behalf of its customers increased by £9 million in the 1990/91 tax year and by £5 million the following year and most of this related to the reclassification of non-resident accounts.

Asked by Mr Niall Murphy, a shareholder, whether the bank had ever made a settlement with the Revenue in respect of debit balances on the credit cards of AIB executive directors, Mr Quinn said he was at a loss to know about it. "None of us is aware of it," he said.

Another shareholder asked whether AIB had ever conducted a share support operation for oil exploration company Dana. Mr Quinn said the bank had hired two independent London law firms, who were expert in the security industry, to investigate this issue and they made a report to the board saying no offence had ever occurred.

Mr Quinn told shareholders that last year had been the most successful ever in the history of the bank. Earnings per share increased by 25 per cent, pre-tax profits were up 38 per cent, while the total dividend rose by 18 per cent.

However, he said that the introduction of a single European currency was expected to result in an intensification of competition in the banking industry, while further falls in interest rates would mean that bank margins would reduce further.

Losses on foreign exchange transactions following the introduction of the single currency would total some £25 million, although this figure would be higher if Britain joined Economic and Monetary Union (EMU), Mr Quinn said.

He said AIB had to grow its operations to compensate for shrinking margins and the loss on foreign exchange business.