The Financial Regulator is investigating the placing of a multi-billion euro deposit with Anglo Irish Bank before the end of the bank's financial year by rival lender, Irish Life & Permanent (ILP).
The Government-appointed directors at Anglo Irish are also investigating the deposit, which was lodged prior to the bank's reporting year-end on September 30th.
It's understood that the deposits were withdrawn by ILP a week to 10 days later.
The regulator is examining the movement of deposits into the bank around its year-end and whether Anglo Irish artificially propped up deposit around the end of its accounting year in a bid to bolster its financial strength.
The regulator's spokesman said: "There are various strands to our investigation into Anglo Irish Bank and this issue would be one of those."
ILP confirmed in a statement last night that it had placed deposits with Anglo Irish during September 2008 and in particular on September 30th following announcement of the Government bank guarantee scheme.
The company said that the transactions were "fully and appropriately accounted for" in its books and records, and in its reports and returns to the regulator.
"During a period of unprecedented turmoil in global financial markets, there was an acceptance that financial institutions would seek to provide each other with appropriate support where possible," the company said.
The company declined to confirm the amounts involved.
The movement of deposit into banks are closely monitored by investors and stock market analysts as a sign of the financial strength of a bank.
The volatility of deposits at Anglo Irish was one of the factors that prompted the Government to nationalise the State's third largest lender last month.
The regulator is already investigating the transfer of loans off Anglo Irish's balance sheet before its reporting year-end by its former chairman Sean FitzPatrick in a bid to conceal them from the auditors and shareholders of the bank.
It recently widened its investigation to assess deposit movements at the bank around its year-end last September and at the time of the announcement of the State bank guarantee.