The European Commission is considering action which could lead to heavy fines against banks in at least three European Union states suspected of fixing fees for exchanging euro-zone bank notes, an EU source said yesterday.

This follows months of investigations into bank fees for exchanging currencies and carrying out cross-border payments in the 11 European Union states that introduced the single currency, the euro, a year ago.

Consumers and politicians have complained that fees have increased despite the rates for changing French francs into German marks and other euro-zone currencies being locked a year ago, eliminating foreign exchange risk.

European Commission antitrust officials carried out surprise inspections at Irish, Dutch and Belgian financial institutions. In Ireland, AIB and Bank of Ireland were both inspected.