The move today by Irish Life and Permanent (IL&P) chief executive Denis Casey to resign has been generally welcomed.
Mr Casey said this afternoon he was resigning from his position having earlier received backing from the board of the bank.
The announcement came after a meeting between Minister for Finance Brian Lenihan and chairman of Irish Life & Permanent Gillian Bowler today over the bank’s €7 billion deposit into Anglo Irish Bank last September.
In a statement, Minister for Finance Brian Lenihan said: "Last night I stated that the Board of Irish Life and Permanent must discharge its responsibilities in relation to the serious matters that have arisen. I welcome Mr Casey's decision to resign from his position in the group. This is an essential first step in repairing the reputational damage done to the Irish financial system by this transaction."
Commenting on Mr Casey's resignation, Fine Gael frontbench spokesman Simon Coveney said: "The announcement of the resignation of the chief executive of Irish Life and Permanent is welcome but alone will not restore trust in the integrity of our financial system.
“That collapse of trust is not solely linked to bankers; the truth is it also includes a loss of trust in the ability of Government to manage this crisis. Minister Lenihan’s explanation as to his involvement in this controversy is simply not credible."
Mr Coveney questioned whether the Government or the Regulator approved the IL&P/Anglo Irish transfer of €7bn.
Green Party finance spokesman Senator Dan Boyle welcomed Mr Casey's resignation but said it was "only the start of a process".
"It should not be followed again by a situation we are becoming all too familiar with; senior bank officials stepping aside, receiving golden handshakes and riding off into the sunset. It is worrying that the board of Irish Life and Permanent chose at first not to accept this resignation and continuing questions remain about the position of the members of that board."
Mr Boyle said ultimately the law had to take its course. He said those who had knowledge and who had participated in the affair must be brought to account.
Elsewhere, in a statement issued tonight, the Financial Regulator said it "utterly rejected" any claims it would have encouraged lending practices such as those relating to Anglo Irish Bank and Irish Life & Permanent.
In a statement after a meeting tonight, the Regulator said: "The Authority has made it clear that over the period of the current turmoil 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."
"The Authority views the various issues that emerged in relation to the transactions involving these institutions as completely unacceptable."