A merger with First Active was the brainchild of Anglo Irish Bank chief executive Mr Sean Fitzpatrick. He put the proposals to the former building society's acting chairman and chief executive, Mr John Callaghan, early this year and both sides agreed the union made sense. First Active needed a chief executive and a strong management team, while Anglo wanted to achieve scale and expand its presence in the Irish market. The price at which the deal could be done was swiftly agreed but it was the wrangling for control which could not be resolved. Or was it?

The deal was highly complex, with both sides retaining leading groups of advisers to ensure it would work. The sticking point seems to be the different interpretation of merger accounting rules by Ernst & Young and PricewaterhouseCoopers. Ernst & Young told Anglo it could claim the most powerful positions in the enlarged boardroom while PricewaterhouseCoopers told First Active this was unsustainable if the deal was to proceed as a merger.

But it was the insistence of Anglo Irish Bank in recent days that it wanted total control of the key boardroom functions, specifically that of chairman, which First Active could not wear.

Given the cool reception to the news of the link-up in the markets Anglo Irish Bank was under pressure to come up with a convincing management line-up and strategy.

A move into retail banking was an entirely new departure which took the market by surprise. Most analysts viewed it as an opportunistic move by Anglo and while the strategic merits of the deal had yet to be explained, the bank had its work cut out in convincing the market of its future success.

The break-up bears many of the hallmarks of the collapse of the Bank of Ireland and Alliance and Leicester deal last year. A late shift in the make-up of the board scuppered those talks at a time when the bank's shares were sliding in value amid negative sentiment to the deal. At that stage, some observers suggested the bank had deliberately taken its tough stance on boardroom appointments knowing it would lead to a breakdown of the negotiations and provide it with a late exit mechanism from the talks. It is possible that Anglo adopted the same tactic.

Today both banks resume business as usual. First Active will set about appointing a chief executive while its shareholders will wait with trepidation to see whether their stock takes a further fall in response to the disappointing news. Anglo Irish Bank will get back to what it is good at and try to reassure the markets that it knows where it is going.