The Irish Bankers' Federation and the Irish Mortgage and Savings Association will join seven Irish banks in defending European Commission price-fixing allegations.

The Commission confirmed yesterday that it has issued statements of objections to the two representative bodies, together with Bank of Ireland, AIB, TSB Bank, Irish Life & Permanent, Ulster Bank, National Irish Bank and ACC Bank, claiming they conspired to fix charges for exchanging currencies in the euro zone.

Banks and industry bodies in Finland, Belgium and Portugal have also been asked to defend similar allegations.

IBF director general Mr Jim Barden said it is confident the Irish banks will successfully defend these allegations. The federation was part of the changeover board appointed to handle the switch to the euro and is being charged together with the banks for allowing a price-fixing cartel to operate.

Mr Bardon said all of the commissions charged by the banks for exchanging euro zone currencies were approved by the Director of Consumer Affairs, Ms Carmel Foley, and that foreign exchange charges had been reduced by between 20 and 30 per cent since the introduction of the euro.

Ms Foley approved each of the bank's foreign exchange commission charges individually.

The Commission raided Bank of Ireland and AIB last year as part of its on-going investigations into foreign exchange charges. And while five other banks have also been accused of price fixing, the investigation is expected to centre on the two big banks which account for the greatest amount of foreign exchange transactions.

All of the banks insist they have no case to answer. Speaking to shareholders last week, Bank of Ireland's former governor, Mr Howard Kilroy, described the investigation as a "political flag waving exercise". He said it was a "joke" to say it was involved in a conspiracy with AIB on foreign exchange charges.

The Commission has the power to impose fines of up to 10 per cent of a company's global sales in serious cartel cases.

The Commission said it had enough evidence that the 120 banks identified in the four EU states were violating European Union competition rules. The Commission's investigation has shown that the accused banks may have engaged in price-fixing deals to raise the exchange fees or control their decrease.

The Commission noted that the decline in exchange fees was a natural consequence of the final locking of euro-zone currencies on January 1st last year.