Irish Nationwide Building Society has emerged as a major financial backer behind housebuilder Mr Liam Carroll's apparent attempt to take over the property group, Dunloe Ewart.
The stake the mutual society controls on behalf of the developer has a current value of £36 million (€46 million) and is the equivalent of about 10 per cent of the society's net lending last year.
Irish Nationwide managing director Mr Michael Fingleton would not discuss the loan or the use of shares as security, citing client confidentiality.
It is unusual for a building society to become involved in this type of deal on such a scale. A spokesman for Irish Nationwide said, however, that the use of shares in a public company as security for commercial loans was perfectly in keeping with Central Bank requirements for credit institutions.
He said that the disclosure of the society's interest in the Dunloe Ewart shares was simply a requirement of the Irish Takeover Panel, as control over the shares has changed from Mr Carroll to Irish Nationwide.
According to a disclosure to the Stock Exchange from Irish Nationwide's lawyers, O'Donnell Sweeney, the 100.6 million shares in Dunloe Ewart held by Mr Carroll have been mortgaged to Irish Nationwide "as security for certain advances".
Yesterday's stock exchange disclosure relates only to the Dunloe Ewart shares and there is no requirement for Irish Nationwide or Mr Carroll to disclose any other business relationship. The Central Bank declined to discuss the specifics of the Irish Nationwide case, but a spokesman said that the main requirement of credit institutions is that not more than 25 per cent of assets be involved with any one client.
Mr Carroll now holds just under 26 per cent of Dunloe Ewart shares and is the biggest shareholder in the property group. Mr Carroll is the main shareholder in Zoe Developments, one of the biggest apartment developers in Ireland.