angrylad, I'm slightly confused about one detail. You say you were probably in the bar where the fraud occurred, but your friends weren't in that bar. What did you do in that bar? How did you pay for it? Were you in that bar long enough for someone to take and replace your wallet?
There is no known way (currently) for someone to by-pass the PIN on the card. Assuming BoI are right, and the transactions were verified by PIN, someone else must know your PIN.
Did you use your card with PIN anywhere else that night? They might have had a camera watching the keypad. Alternatively, they could have had a doctored terminal that recorded your keystrokes or altered transaction amounts. Shell petrol stations in the UK had an inside job like this back in May where they had to [broken link removed]. This [broken link removed] is also interesting.
The other problem is how they had time to remove your wallet/card and bring it to an accomplice in the bar where the fraudulent transactions were processed. Did anyone have time to do that? It's also possible that a terminal in an establishment where you did use your card pretended to be a terminal in the other bar. This would require less access to your card. A final (but unlikely) possibility is that they cloned your card, chip and all. They would still need your PIN to use it, but it would give them plenty of time to perform the fraudulent transactions.
In terms of moving forward with a complaint against the bank, you need to escalate with customer care, and exhaust the bank's internal complaints procedures. Though from what you say about contacting the CEO, you may already have done this. Then you can go to the FS Ombudsman as Rainyday suggests. Legal action is also a possibility --
Ross Anderson has acted as an expert witness in banking card fraud cases in the UK. You should also pursue a criminal complaint against the bar whose merchant account the fraudulent transactions were processed through. As it's abroad, I don't know how much help the Guards can be.