The Financial Regulator has said it views the issues relating to transactions between Irish Life & Permanent and Anglo Irish as completely unacceptable.

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.'

IL&P CEO to resign

Irish Life & Permanent's chief executive, Denis Casey, told the company's board he is to resign.

In a statement released this afternoon, the bank said his resignation had been accepted with the 'utmost regret', but Mr Casey would remain as acting CEO during the process of finding his successor.

Mr Casey offered his resignation last night, but this was turned down by the board. Two other executives resigned last night. Mr Casey said he had reflected on the situation overnight and this morning, and felt that continuing would serve only as a 'distraction' in the current challenging environment.

Finance Minister Brian Lenihan has welcomed Mr Casey's decision. 'This is an essential first step in repairing the reputational damage done to the Irish financial system by this transaction,' he said.

Denis Casey has been chief executive of Irish Life & Permanent since mid-2007. He was previously chief executive of the group's banking business Permanent TSB.

The chairman of the IL&P board, Gillian Bowler, said that she accepted the notification of resignation with the 'utmost regret'. 'Denis Casey is a man of the highest integrity and honour,' she said.

'I have always held him in the highest regard as a colleague and as a friend and I know that his decision today - as always - has been prompted by his dedication and loyalty to the company,' she added.

The statement also revealed that Gillian Bowler will chair a committee of non-executive directors which will oversee a competition for the recruitment of a new chief executive.

This committee will comprise of Danuta Grey, Breffni Byrne, Liam O'Reilly, Margaret Hayes and former Finance Minister and EU Commissioner Ray MacSharry.

Lenihan having fresh IL&P talks

Finance Minister Brian Lenihan was meeting the chairman of Irish Life & Permanent today to discuss the statement the bank released overnight.

IL&P said its finance director Peter FitzPatrick and head of group treasury David Gantley had resigned following the controversy over deposits made with Anglo Irish Bank.

A spokesperson for the minister said he had considered the Irish Life & Permanent statement and would meet the chairperson and a number of non-executive board members to discuss its implications.

After a meeting yesterday with Minister Lenihan, IL&P held an eight-hour board meeting. Its statement afterwards said the board noted with strong disapproval and disappointment the measures used to support Anglo Irish Bank. It said it accepted resignations of the two executives.

Chairwoman Bowler said that, in providing support to the broader financial infrastructure, mistakes were made - for which she and the board apologise unreservedly.

The bank provided details of the transactions with Anglo Irish Bank which resulted in total transfers of €8.2 billion from Irish Life & Permanent. These included deposits of €4 billion made on September 30 which were withdrawn the following day.

Read the details of the Anglo deposits

'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,' Ms Bowler said.

Shares in Irish Life & Permanent closed down over 4% at €1.58 in Dublin this evening.