Political reaction: The Taoiseach, Mr Ahern, has said that AIB should do "whatever is necessary" to prevent all Irish financial institutions being subjected to international ridicule as a result of the financial scandals at the bank.

Stating that it was "just hard to believe" how so many things were happening in the bank, he said AIB had to move quickly to clean up the fallout from a string of disclosures about malpractice in the bank.

Mr Ahern stopped short of calling for resignations from the bank's current management when asked if such action would help restore confidence in the bank. "The easy thing for me to do is call for resignations, I mean that's an easy headline," he said.

"From my position - I don't hold any brief for any one bank, I do not want to see the Irish financial institutions ridiculed internationally. That is the biggest concern. And to make sure that that happens, we have to make sure that whatever is necessary at the top and the middle level is carried forward quickly." Stating that "enormous" amounts of international money were being managed by Irish-based institutions, he said "that is all international money based on the credibility of the Irish financial system".

Mr Ahern said there was "no problem" with the credibility of the system. "But if you had a series of these and had anything of a current nature, it would do us damage, so I think it has to be sorted out sharply, efficiently and then we move on, but it has to be moved on with strong powers, strong rules and no more nonsense."

Mr Ahern said the power of the IFSRA to "talk to Revenue" should be used in the course of the investigations into the bank.

The Tánaiste, Ms Harney, said on RTÉ's The Week in Politics programme last night that it was not clear why AIB had agreed to underwrite the cost of the investigations at the bank. "I believe any investigations that have to be paid for should be paid for by the individuals. I don't believe the bank's shareholders should have to carry the cost here, nor indeed should the taxpayer. Until we see people actually paying for bad behaviour, it's going to continue."

The Fine Gael leader, Mr Kenny, said it now appeared that the type of rigorous controls that the banks often applied to their customers' dealings "have not been applied to the internal workings within AIB".

"With all the tribunals of inquiry and the litany of scandals which have afflicted this country in recent years, it is very hard to understand exactly why corporate behaviour at AIB... was not what it should have been."

Labour's finance spokeswoman, Ms Joan Burton, said the Government faced "a major crisis of confidence", with the questions thrown up by the AIB events. "The question immediately arises as to whether proper diligence was exercised by Ministers prior to [Mr Mulcahy's] appointment to the chair of Aer Lingus, one of the most important public service positions in the State."

The Green finance spokesman, Mr Dan Boyle, called for the establishment of a commission on banking. "What recent scandals reveal has been the utter ineffectiveness of banking regulation in Ireland in the past, where banks and senior officials in banks could do what they wanted, and how they wanted, without any fear of State sanction."