The former head of the National Treasury Management Agency (NTMA), Dr Michael Somers, said today he did not receive an instruction from the Minister for Finance to increase the level of deposits held in Anglo Irish Bank.

His comments followed a report in the  Irish Daily Mail  today that alleged the Taoiseach Brian Cowen asked the agency to deposit sovereign funds in Anglo in the months before it collapsed.

Former Anglo chief executive David Drumm, now living in the United States, claimed Mr Cowen had told the bank’s executives the State body had not done what he asked.

Anglo wanted about €300 million of sovereign funds deposited with it to shore up confidence in the bank as foreign investors withdrew their funds.

Mr Somers told  Today with Pat Kenny  the NTMA had €40 million on deposit with Anglo in 2008 and said he had not been asked orally nor in writing by the Minister for Finance to increase this.

"We did put a deposit with Anglo of €40 million in August 2007, and that was put on for a period of one year. In fact when we began to look at banks and withdrawing deposits and putting them with the Central Bank, I was somewhat dismayed to discover that we were stuck with Anglo, as it were, for a year because my inclination would have been at that stage possibly to take the money off them," he said.

Mr Somers said the NTMA had sought to insure the deposit through the credit default swaps market. However, even in late 2007 the market was taking a "jaundiced" view of Anglo, he said, and the cost of such insurance was increasing.

Mr Somers said there had been some pressure at "official level" to do more with the banking system. He said he sought legal advice and was told he would be stepping outside his statutory responsibilities if he did something for the benefit of the banking system that might be contrary to the benefit of the State.

"I made it very clear that if we were to put any money with banks, I required written direction from the Minister for Finance. That was my legal advice, and I stuck to it," he said.

"There was no pressure at any stage political or otherwise to go beyond the limits that we would have laid down."

Mr Somers said he did not receive any written instruction from the Minister for Finance to increase deposits with Anglo.

A spokesman for the Taoiseach also denied the claims and said: “The position is that there is no basis in fact for these claims.

“It has already been contradicted by the [then] chief executive of the NTMA.”

Anglo’s former chairman, Sean FitzPatrick, who was at the private dinner with Mr Drumm in Heritage House on April 24th, 2008, claims Mr Cowen told him he would “look into” the funding issue facing the bank.

Commenting today on Mr Cowen's contacts with Anglo Irish, the Tánaiste said: "We just have to reiterate that nothing untoward, inappropriate happened between the Taoiseach on the issues that are in the public domain."

Mary Coughlan criticised Mr Drumm and Mr FitzPatrick for "running to journalists" and said it was important matters were dealt with in the proper way "and not one person saying one thing and another person saying another".

Ms Coughlan said it was "completely untrue" to say the Fianna Fáil party had anything to do with the decisions of Anglo Irish.

Additional reporting: PA