The Republic's second biggest bank is to introduce free banking for current account customers who meet certain requirements.

Bank of Ireland, which has 750,000 current account customers, says those who maintain a €500 balance and use its internet bank to do three online transactions every quarter will not pay any fees.

The bank's chief executive, Brian Goggin, said that he expects about 65 per cent of its current account customers, or almost 500,000, will qualify for free banking. The bank says on average its current account customers pay annual fees of about €49.

If these customers all qualify, Bank of Ireland will forego about €24 million in fees annually, equal to just over 1 per cent of the group's annual profits. The actual cost to the bank will depend on the take-up.

Bank of Ireland has also introduced a range of free banking services for two years for new start-up business customers. The initiatives are part of a "changing for you" customer programme that includes a promise that customers will not have to wait more than three minutes to be served at any of its branches.

Mr Goggin says this will be achieved by placing 500 new staff in customer services roles, simplifying the most common transactions such as lodgement and withdrawal transactions, and enhancing its telephone and online banking services.

"All banks are not the same. We want customers to see that difference when they deal with Bank of Ireland" he said yesterday. "I believe that by improving services and facilities in line with what the customers deem important to them, we will differentiate ourselves from our competitors."

Permanent TSB and National Irish Bank already offer free banking to current account customers. A switching code, aimed at making it easier for customers to move their bank accounts, has also been adopted by the industry and has prompted some movement in the market.

AIB said its current account proposition is constantly under review, but that it has no plans to change its offering in the short term.

Bank of Ireland claims to interact with over 40,000 of its customers every hour through its 265 branches and its telephone and online banking operations.

Some 6,000 Bank of Ireland staff have undergone training and coaching in customers service and it is operating an emergency helpline for customers.

The bank says that 480,000 customers have registered with its online bank and claims customer numbers have been increasing on average by 5,000 a month.

Bank of Ireland will be writing to its current account customers to inform them how they can register for the new free banking account.

They will retain their account number and existing laser or ATM cards.

The new accounts will allow customers to view payments, transfers and direct debits online. They will also be able to view mortgage, savings and SSIA accounts.

Bank of Ireland is also remodelling 90 of its branches over the next three years to improve the layout and offer more privacy to customers.

Two have already been completed, Little Island in Cork and Portumna, County Galway.

"Over the coming weeks and months, customers will see the introduction of a number of changes designed to improve the quality and range of our services," Mr Goggin said.

B of I's abolition of fees: Page 3

AIB has no plans to make any of its staff redundant or to make any radical changes to its branch network, according to the bank's chief executive, Eugene Sheehy.

Announcing the next phase of the bank's partnership agreement with the financial union, the Irish Bank Officials' Association (IBOA), Mr Sheehy said AIB wants to hold onto its position as Ireland's biggest and most successful bank.

"We are pretty committed to the way we are going," he said.

He added that the bank was currently a net employer and was seeking to fill several positions.

Following months of negotiations, AIB said that it had finally reached an agreement and was about to embark upon the next stage of the partnership agreement between the two groups.

By contrast with the original agreement, established in February 2002, the new arrangement will aim to form a closer link between the industrial relations agenda and the strategic principles of the bank; expand the development of the partnership to include local management and IBOA representatives; and to promote a strategy based on increased communication.