A former AIB board member has defended the bank's decision to write-off almost £400,000 of Mr Charles Haughey's £1.1 million debts in 1980 saying it appears to have put up a "tough fight" on behalf of its shareholders.

The director - who asked not to be named - also said the bank would have been mindful that around half of its customers would have been Fianna Fail supporters and a repossession of Mr Haughey's property could have had an adverse impact on its business.

But he insisted he had never witnessed any favouritism being displayed by the bank towards politicians.

Meanwhile, sources close to AIB's former chairman, Mr Peter Sutherland, said last night he knew nothing about Dr Garret FitzGerald's financial woes and was not aware of any agreement with AIB in 1993 to write-off debts of up to £200,000. As chairman of the bank at that time, the sources, added, Mr Sutherland was not involved in the day-to-day affairs of individual customers. Dr FitzGerald's debt arose out of the aborted flotation of the aircraft leasing group GPA.

The bank has insisted the decision in relation to debt write-offs would have been taken at senior executive level. But documents presented at the Moriarty Tribunal on Tuesday show that Mr Haughey was informed in 1978 that the board would be made aware of his financial circumstances.