The European Commission has launched an in-depth investigation into all the Government money received by Anglo Irish Bank since last year.

This is to ensure that the recapitalisations announced do not breach EU rules on state aid for companies.

European Monetary Affairs Commissioner Joaquin Almunia said Anglo Irish would have to 'restructure profoundly'.

But Commission sources would not be drawn on whether Anglo Irish Bank should be wound up.

The European Commission last year approved an emergency capital injection to Anglo Irish worth €4bn. At the same time, it requested a restructuring plan to ensure the bank 'returned to viability'.

However, since then things have changed radically in terms of the huge new recapitalisation requirements.

The Commission investigation means a new restructuring plan will have to be supplied by the end of May, taking into account all the new money.

It approved the €10.44bn in new emergency capital for Anglo Irish, which includes the €8.3bn announced yesterday by Minister for Finance Brian Lenihan.

That amount had already been notified to Brussels earlier this year.

A further €2.7bn in capital funding for Irish Nationwide was also approved. Its restructuring plan must be in place by 22 June.

The restructuring plans by Bank of Ireland and AIB, submitted last autumn, are already being reviewed by the officials at the Competition directorate. But both banks will have to submit any new recapitalisation received as a result of the NAMA discounts.

The essence of approval by Brussels is that any emergency capital injections do not give the institution in question any unfair advantage over competitors. Even though all Irish banks are in trouble, competitors can be taken to mean any other EU bank.

In the case of Anglo Irish, the Commission has not yet been notified of any other extra capital as a result of the NAMA discounts. In particular, it has not been informed of an extra €10bn that Mr Lenihan said Anglo may need.

If the total amount received by Anglo reaches €22bn, as has been suggested, then the Commission will apply the principle that the more money received, the less the activity the bank will be allowed to carry out.

The common comparison is Northern Rock in the UK, which had to reduce its activity to one third of its pre-crisis activity because of the emergency state aid it had received.

However, Northern Rock did not receive the huge amounts that Anglo might end up getting, so the question of whether the Commission would prefer the bank to be wound down if it breaches state aid rules remains a moot point.

Royal Bank of Scotland reduced its activity by between 40% and 45%.

It would all depend on what activity - if any - Anglo can get involved in and whether the company would ultimately become viable.

Commission sources said it accepted that the Government's stance - that closing Anglo would be even more costly - was based on 'calculations which were done seriously' and done with the help of external consultants.

Chairman Designate of Anglo Irish Bank Alan Dukes has said keeping the bank open remains the best option for taxpayers, based on calculations available.

Speaking on RTÉs Six One News, Mr Dukes said even with increased funding requirements 'it still costs less to keep the bank open'.

He said the bank would aim to get back as much money as it could from various outstanding loans, despite write downs.