The Financial Regulator has said it views the issues relating to the two bank’s transactions as completely unacceptable.
Read the full statement
It said investigating officers are on site in the relevant institutions and have been mandated to complete their work as a matter of extreme urgency.
In a statement released tonight, the regulator said ‘it encouraged Irish banks to work together where necessary so as to continue to use normal inter-bank funding arrangements for liquidity purposes’.
‘The Authority utterly rejects any suggestion that this would have constituted encouragement of the type of circular transactions that have been referred to in recent reports and statements concerning Anglo Irish Bank and Irish Life & Permanent.
‘Circular transactions, unlike normal inter-bank lending, do not provide liquidity to financial institutions.’
The chairman of the board of Irish Life & Permanent has accepted the resignation of chief executive Denis Casey.
Mr Casey told the board he will stay as acting group chief executive for a transition period until a replacement is found.
His initial offer to resign last night was turned down by the board.
Mr Casey said that, having reflected on the situation overnight, he had come to the decision that regardless of the Board's support, his continued involvement would serve as a distraction from its efforts 'to successfully navigate the difficult challenges of today's market'.
In a statement, Minister for Finance Brian Lenihan said: 'I welcome Mr Casey's decision to resign from his position in the Group. This is an essential first step in repairing the reputational damage done to the Irish financial system by this transaction'.
The chairman of the board, Gillian Bowler, said that she accepted the notification of resignation with the ‘utmost regret’.
She indicated that the board would immediately proceed to seek a successor for Mr Casey.
Denis Casey had been chief executive of Irish Life & Permanent since mid-2007. He was previously chief executive of the group's banking business, Permanent TSB.
Two senior executives, Finance Director Peter Fitzpatrick and Head of Group Treasury David Gantly, have also resigned from Irish Life & Permanent in the wake of the controversy over deposits made to Anglo Irish Bank.
Following yesterday's meeting with Minister for Finance Brian Lenihan, the bank held an eight-hour board meeting, which ended at midnight followed by a statement after 3am.
It said the board noted with strong disapproval and disappointment the measures used to support Anglo Irish Bank.
Commenting of the resignation of its IL&P's two senior executives, Chairman Gillian Bowler said: 'I have absolutely no doubt about the integrity of the individuals concerned.
'However, in providing support to the broader financial infrastructure, mistakes were made - for which I and the board apologise unreservedly.'
The bank provided detail of the transactions with Anglo Irish Bank that resulted in total transfers of €8.2bn from Irish Life & Permanent.
These included deposits of €4bn made on 30 September, which were withdrawn the following day.
While there have been two resignations, many in Government circles were not expecting Mr Casey to remain
Speaking on RTÉ Morning Ireland, Fianna Fáil Chief Whip Pat Carey said he personally had expected a different response by the board.
Elsewhere, the Financial Regulator has published its codes of conduct for banks on mortgage arrears and for business lending to small and medium enterprises, following the Government's announcement on the recapitalisation of Bank of Ireland and AIB.
The code relating to mortgage arrears is to come into effect on 27 February while the latter will apply from 13 March.
Welcoming the publication, Mr Lenihan noted that the codes were statutory and banks would be required to demonstrate compliance.
