The chairman of Irish Nationwide Building Society (INBS) Michael Walsh has resigned.
A spokesman for Minister for Finance Brian Lenihan said he had been informed of Dr Walsh's resignation, and said the appointment of the new chairman was a matter for the board of the building society.
The board includes which includes two public directors appointed under the Credit Institutions scheme.
This evening's unexpected resignation follows revelations in this morning's Irish Timesthat Irish Nationwide gave tens of millions worth of sterling and dollar loans to former Anglo Irish Bank chairman Seán FitzPatrick as part of his loan transfers between the two institutions to conceal up to €122 million in borrowings from Anglo Irish.
It also follows yesterday's downgrading of Irish Nationwide's debt ratings by international credit rating agency Moody's.
The Irish Timesunderstands the building society provided Mr FitzPatrick with loans of $56 million and £14 million on September 26th, 2007. Irish Nationwide also lent the then Anglo Irish chairman $26 million on September 27th, 2006. This loan was secured with an undertaking from Anglo Irish, meaning that the bank would repay the loan if he could not. The £14 million personal loan was secured on properties and 4.5 million Anglo Irish shares, worth €55 million at the time.
The building society had its long-term bank deposit rating and senior debt rating reduced by two notches to one level above speculative grade or "junk" status yesterday.
The rating was cut to "Baa3", the lowest investment grade rating before "junk" status, from "Baa1", as the agency expects higher bad debts on the building society's commercial property loan book.
The building society's "bank financial strength rating" was reduced from 'C-' to 'D-', which represents a lender displaying "modest intrinsic financial strength, potentially requiring some outside support at times".
Moody's said Irish Nationwide remained vulnerable due to the poor performance of commercial property, which accounts for about 80 per cent of the society's overall €16 billion loan book.
It also cited "poor asset quality" on the building society's residential mortgage book and "the high concentration risk" within the overall loan book. This means the lender has a small number of borrowers who account for a large proportion of the society's loans.