In an internal presentation to Anglo management, Mr Aynsley also says he could never have foreseen what he calls the 'carnage' brought about the previous management of the bank.
He rejects calls to shut the bank down, saying a wind down of Anglo would lead to an outflow of foreign deposits, putting further funding pressure on the State.
Mr Aynsley says the plan to split the bank into a 'good bank' and an asset recovery company to deal with risky loans is 'the lowest cost alternative'.
He says the current target is to separate the operation of the two within the bank by the end of this year, with a full split by the end of 2011.
Mr Aynsley says Anglo has identified €10-15bn of loans it believes can go into the 'good' bank. He adds that the new bank could be part of a reorganisation of the Irish banking system.
The Anglo chief also calls for 'far-reaching' reform of the whole financial system, arguing that a suitable model for Ireland would be three or four large domestic banks, with a number of other companies focusing on niche activities.
In his presentation, the Anglo CEO defends the bank's efforts to recover loans from the Quinn Group and Arnotts, saying that if the bank were to let these businesses deteriorate without action, losses would be even greater, leading to the need for further support from the taxpayer.
The presentation says around 800 people have left the bank since the end of 2008, though 200 new staff have joined. Mr Aynsley says there are plans to strengthen Anglo's management team further in the coming months.
