The Government has agreed to widen the terms of reference of the Commission of Investigation into the banking collapse.
The time period under scrutiny will now extend up to January 2009, covering the phase which led to the Government’s decision to nationalise Anglo Irish Bank.
Minister for Finance Brian Lenihan confirmed this evening the Commission would examine corporate governance and risk management in each of the banks covered by the Government’s guarantee for the six-year period from January 2003 to January last year.
The announcement follows Mr Lenihan's meeting with the Joint Oireachtas Committee on Finance and the Public Service.
Mr Lenihan said the Government had also approved the referring to the committee the policy lessons arising from the preliminary reports into the banking crisis produced by Klaus Regling and Max Watson.
The minister said he expected to be able to announce the appointment of an individual to head the Commission of Investigation shortly.
Earlier today, Mr Lenihan promised action against banks that provide "misleading information" to the National Asset Management Agency (Nama).
He warned those who knowingly gave false information to Nama could face criminal prosecution.
"It's written into the legislation that if there's any misleading statements by bankers that they commit a criminal offence," he said.
"If evidence of that were to materialise, Nama could put it in the possession of the prosecuting authorities and deal with the banks accordingly."
He was speaking following the publication of Nama's revised business plan yesterday, which said the agency could lose €800 million in the worst case scenario. This shortfall would be covered by a levy on banks, Mr Lenihan said.
"The idea that banking system can't cough up €800 million in 10 years time is absurd," he said. "At worst, there is no loss to the taxpayer from Nama."
The agency said it expected to make a profit of €1 billion, but should economic conditions improve, this total could reach as much as €3.8 billion.
An earlier draft business plan in October estimated Nama would make €4.8 billion profit.
Mr Lenihan denied that there had been an "endless deterioration" in Nama's figures, and said these the difference in the profit forecasts between to the two business plans was explained by the earlier version being based on information supplied by the banks themselves.
"We didn't rely on that information [for the revised plan], we didn't take any decisions on foot of that information; we simply gave an indication of what we believed the state of play was at that stage, and at that stage we believed Nama could yield a profit of several billion," he said.
"It now appears Nama are confident they will make a profit of a billion. The key point here is that we didn't rely on the figures, we didn't trust the banks. We weren't hoodwinked by the banks.”
"The whole reason we set up Nama was because we realised as a Government that you had to have a separate independent statutory valuation of bank assets," he told RTÉ's Morning Ireland.
He said the agency was "shocked" at what he described as the "horrific picture" within the banks because of the absence of any proper procedures.
Fine Gael finance spokesman Michael Noonan said the new banking investigation should be allowed to inquire into the management of the banking crisis by Mr Lenihan and his officials.
“It is now clear that the Minister, on at least two occasions, made very serious policy decisions which were based on false information provided by the banks," Mr Noonan said.
“He didn’t know the extent of Anglo Irish Bank’s indebtedness when he covered all their liabilities with the bank guarantee. And I believe he was as surprised as the rest of us that at least €22 billion is required from taxpayers to bail out Anglo Irish."
Mr Noonan said it was clear from the updated Nama business plan that the banks did not provide accurate information to Nama on their indebtedness.
He said in order to fully learn the lessons from the banking crisis and to make sure it never happened again, "we need to know the extent to which officials offered good or weak advice to the Minister about the public finances and taxation in the period from 2004 and 2007".
"I am therefore calling for officials to be allowed to give testimony to the Oireachtas Finance Committee on these matters.”