IRISH LIFE and Permanent, which is almost fully State owned, is searching for a new chief executive for its bank, Permanent TSB, before the group is split and the bank becomes a standalone entity.

The recruitment process executive is “well advanced”, said a company spokesman, and internal and external candidates had applied including a number from overseas.

The current chief executive of Permanent TSB, David Guinane, has also applied for the job, which will be subject to the Central Bank’s fitness and probity rules.

The company said Kevin Murphy, the chief executive of Irish Life and Permanent, will remain on as chief executive of Irish Life and the group’s finance director David McCarthy will retain that role at Irish Life.

The company says it still plans to complete the separation of the life and banking businesses by the end of March 2012. It set up a new holding company last year to facilitate the splitting of the businesses.

The company is being split up and Irish Life sold after the Central Bank directed it raise €4 billion to cover higher losses and the deleveraging of €15.7 billion in loans to return to self-sufficiency following stress tests in March.

The State took over more than 99.5 per cent of the company by injecting €2.7 billion in July.

The growing euro crisis forced the owner of Canada Life, Great West Lifeco, to cancel its planned purchase of Irish Life last month.

This would have raised most of the remaining €1.3 billion required. The Government will inject this sum by the end of the year and take ownership of Irish Life, pending its future sale when market conditions improve.

Yesterday’s EU-wide bank stress tests results showed the company increased its holding of Irish Government bonds from €1.8 billion at the end of last year to €2.4 billion in September.