Irish Nationwide Building Society has reported a loss of almost €2.5bn for last year, after setting aside almost €2.8b for loan losses.

Almost all of the loan losses were linked to commercial property lending.

Chairman Danny Kitchen described the losses as 'massive' in relation to the size of Irish Nationwide.

He said the collapse in property markets was exacerbated by what he called the society's 'flawed model' of business.

The results also show that customer deposits with the society dropped by €1.5bn last year to €5.3bn, mainly due to money being withdrawn from its subsidiary on the Isle of Man.

The Government is injecting €2.7bn into Irish Nationwide to help it meet capital requirements set out by the Financial Regulator.

Mr Kitchen said the future shape of the Irish banking system was not clear, and would be shaped by the Government and EU.

As part of this, he said the society had had talks with EBS, but these were unlikely to conclude in the near-term.