AIB has tightened the conditions under which it offers free banking to customers holding personal current accounts.

It said the changes are aimed at recovering costs, including what it calls the "significant" cost of providing money transmission services.

Currently, to qualify for free banking, customers with current accounts must make at least one purchase a quarter using an AIB debit card and at least one payment using phone and internet banking.

However, from 28 May customers must keep their credit balance above €2,500 for a full quarter to escape maintenance and transaction fees.

AIB said 40% of its personal current account holders will qualify after the change.

This figure includes student accounts, graduate accounts and accounts for customers over 60.

"While this was a difficult decision to make, nonetheless it is a necessary one if we are to continue to create the conditions in which we can become a strong and viable entity again," said AIB's Bernard Byrne.

The National Consumer Agency described the move as "outrageous".

The agency says consumers are losing out on €98 a year in interest that they could earn if this money was on deposit.