LOANS TO DIRECTORS:A SUB-COMMITTEE of the board of Anglo Irish Bank chaired by the former head of the Revenue Commissioners, Frank Daly, is to conduct an inquiry into loans to directors in the bank.

The bank's chairman Seán FitzPatrick and its chief executive David Drumm resigned last week because Mr FitzPatrick had over the past eight years taken steps to ensure that loans he had from the bank totalling €87 million did not appear in the bank's annual accounts.

Non-executive director Lar Bradshaw, who had some of these loans out with Mr FitzPatrick, also resigned.

Mr Daly was recently appointed to the bank's board as one of the people put forward by the Government as part of the State guarantee scheme for the banks.

A senior lawyer is to be appointed, possibly as early as today, to conduct the review and report back to the committee, which will be made up of non-executive directors.

The newly appointed chairman of the bank, Donal O'Connor, yesterday apologised "unreservedly" for the crisis at the bank.

"We recognise and understand the sense of hurt, outrage and disappointment that people feel regarding the bank. We want to apologise unreservedly to our customers, employees, shareholders and all other stakeholders for creating this situation.

"The challenge for Anglo now is to restore people's trust and confidence in the bank and we are determined to do this," he said. "We have commenced the process to formally review the bank's governance including policy and practice relating to directors' loans.

"A sub-committee of the board, chaired by Frank Daly, a new non-executive director from the panel of Government nominees and former chairman of the Revenue Commissioners, has been established to oversee this process.

"An independent experienced lawyer will be appointed this coming week to undertake the review which will begin immediately.

"We have also taken the initial steps towards the appointment of a new chief executive. We have established a board sub-committee headed by Ned Sullivan, senior independent director, which will formally appoint an external advisor tomorrow to commence the process.

Mr O'Connor is chairman of the Dublin Docklands Development Authority, with which Anglo Irish Bank does substantial business. It is expected he will step down in order to prevent any perception of a conflict of interest.