The trial of four senior bankers has heard that Irish Life and Permanent stopped a €3 billion transfer from Anglo in December 2008 because of a fear over “reputational damage”.

Former Irish Life and Permanent (ILP) CEO Denis Casey and Anglo’s former head of finance Willie McAteer and two others are accused of conspiring to mislead investors by using interbank loans to make Anglo appear €7.2 billion more valuable than it was.

Mr McAteer (65) of Greenrath, Tipperary Town, Co. Tipperary and Mr Casey (56), from Raheny, Dublin are on trial alongside Peter Fitzpatrick (63), from Malahide, Dublin, who had been ILP’s former director of finance and John Bowe (52), from Glasnevin in Dublin, who had been Anglo’s head of capital markets .

They have all pleaded not guilty at Dublin Circuit Criminal Court to conspiring together and with others to mislead investors through financial transactions to make the bank appear €7.2 billion more valuable than it was between March 1st and September 30th, 2008.

Mike Nurse, who worked in the risk section of the treasury department of Anglo, told the trial that he was aware that the first steps of a financial transaction between Anglo and ILP had begun in December 2008.

He said that ILP would receive funds from Anglo and use that money to reduce its borrowings from the European Central Bank before its financial year end report was prepared for the market.

Brendan Grehan SC, for Mr Fitzpatrick, noted that the Financial Regulator had agreed to that transaction “to the extent of €3 billion”. But he also noted that whilst it had started, it was then “unwound”.

Counsel asked Mr Nurse: “Were you aware that ILP said to reverse it because it was worried about reputational damage by doing a deal with Anglo?”.

The witness replied that he didn’t recall it being instigated by ILP.

Mr Grehan asked if there was a serious public issue in late December 2008 regarding Anglo.

Mr Nurse said he thought the September transaction, in which Anglo and ILP had engaged in a €7.2bn back to back transaction, allegedly to improve Anglo’s balance sheet for its year end report, had “started to get additional scrutiny”.

Mr Grehan put it to the witness that it had nothing to do “with September” and “was to do with an entirely different issue altogether: chairman’s loans”.

Counsel asked: “Do you remember the chairman of the bank having to resign around December 18th?”. Mr Nurse said that he did.

Asked if the chief executive resigned, Mr Nurse said yes.

The trial continues before Judge Martin Nolan and a jury.