TOP OFFICIALS in the Financial Regulator's office, including chief executive, Pat Neary are giving different accounts about its state of knowledge of former Anglo Irish chairman Seán FitzPatrick's bank loans, Minister for Finance Brian Lenihan has said.

In one official's account, Mr Neary did know about Mr FitzPatrick's conduct in January, which, if confirmed, would raise serious questions about his ability to remain in his post, a number of Government sources said.

Mr Lenihan said that he learned last Thursday after a Dáil debate on banking that "at some level within the regulator's structure there had already been an awareness of the particular role of Mr FitzPatrick. That is a very, very serious matter."

The board of the Irish Financial Services Regulatory Authority decided on Saturday to order an inquiry by two of its directors into the officials' accounts.

Authority chairman Jim Farrell had been asked by the Minister to check on whether officials, or board members knew in advance about Mr FitzPatrick's loan dealings.

Mr Lenihan said: "The board confirmed that the board as a board had no knowledge of this particular transaction. That, of course, is very serious, and the board confirmed that it has established a process of inquiry into levels of knowledge that existed within the regulatory structure.

"As I understand it there are three officials involved. Their versions of events have to be checked and cross-checked. Two members of the board have now been delegated to do that.

"It is my job to ensure that there is confidence in the regulatory system. I have confidence that the board will deal with this matter.

"I am not aware whether Mr Neary knew, or not, but, again, there are different versions of events. I am aware that in one version he did, but those versions have to be resolved. I am not in a position to resolved."

Mr Lenihan asked the chief executive of the authority, Mr Neary on December 10th to investigate Anglo Irish's loans to its own directors. He said he had noticed that it had more of these type of loans than other banks.