A former non-executive director of Anglo Irish Bank has said the Financial Regulator was fully on board with the transaction to unwind businessman Seán Quinn's stake in the bank.

Anne Heraty was giving evidence at the trial of the bank's former chairman, Seán FitzPatrick and two former directors of the bank, Patrick Whelan and William McAteer.

All three men deny giving unlawful financial assistance to 16 people to buy shares in the bank.

Mr Whelan also denies seven charges of being involved in the fraudulent alteration of loan facility letters.

Ms Heraty is the Chief Executive of CPL Resources, a major recruitment company, and was a non-executive director of Anglo Irish Bank from 2006 until 2009.

She said she was horrified when she heard about the extent of Mr Quinn's interest in the bank through Contracts for Difference.

By March 2008, she said tension was building about his position.

She said the Financial Regulator was very anxious that a solution be found and she said the regulator was putting significant pressure on the bank's Chief Executive, David Drumm, and Mr Fitzpatrick to find a solution.

Ms Heraty said sometime in July, Mr Fitzpatrick advised her that efforts to place some of the shareholding with an institutional investor or sovereign wealth fund were not going well and the bank's executives were looking at an alternative plan.

She said it was possible this was a conversation she had with Mr Drumm.

Ms Heraty said Mr Fitzpatrick called her to say the placing of shares was going ahead with ten "high net worth individuals".

She said she was told the regulator was on board, the relevant advice had been taken and the plan was good to go ahead. She said no names were mentioned to her.

Ms Heraty said she got a further call from Mr Fitzpatrick to say the shares had been placed.

She said she only became aware of recourse arrangements after the bank was nationalised in January 2009.

Ms Heraty said that as far as she was concerned the bank's funding and liquidity were not a significant issue before September 2008.

She said there was regular discussion about this at board meetings, but it was always "comfortably" within its balance.

She said it was her belief that the Quinn issue had been dealt with satisfactorily with the support of the Financial Regulator and the Central Bank and that the bank could move on.

Earlier, the former financial planning director of the Quinn Group, Shane Morrison, gave evidence about the building up of positions on the stock market through Contracts for Difference.

He said a company was set up to invest in the stock market through CFDs. The beneficiaries of the company were the five children of Mr Quinn.

Mr Morrison said Mr Quinn was in very frequent contact about the investment strategy.

He said at the end of 2006, there was a total gain of almost €300 million on the CFD account. But by the end of 2007, there was a loss of €560m.

Mr Morrison said at the beginning of 2008, Mr Quinn continued to direct the size of his interest in Anglo shares to be increased.