Investors see the escalating cost of rescuing Anglo Irish and uncertainty over its fate as a major threat to Ireland's creditworthiness and the next potential euro zone trouble spot after Greece.
Science and technology minister Conor Lenihan said on Saturday the bank would be "decommissioned," the latest signal from the government that it is about to bow to growing political pressure to shut down the lender.
The Sunday Times said without citing sources that Finance Minister Brian Lenihan would ask in his meeting with European Competition Commissioner Joaquin Almunia on Monday if Anglo Irish could be wound down over a period of up to 15 years, arguing that a quicker closure would be too costly.
Almunia, who will have the final say on Anglo Irish's fate, said on Saturday he would discuss the matter with Lenihan but did not say what was his preferred outcome.
Anglo Irish CEO Aynsley has proposed carving out a small functioning bank via a "good bank/bad bank" split but there are signs ministers are moving towards wanting an eventual winddown.
Aysnley told the Sunday Business Post the good bank/bad bank split "doesn't look like it is going to happen."
The government -- with a wafer-thin parliamentary majority -- will be hard-pressed to ignore public opinion, already aghast at having to shell out 25 billion euros for the bank's reckless property lending while facing yet another round of tax hikes and spending cuts in this December's budget.
Aynsley told the Sunday Business Post it would be wrong to close the bank entirely as even a gradual wind down over 10 years would cost 4 billion to 5 billion more than keeping part of it open.
"From an economic and financial point of view, we are better off to keep it as a stub," he said.
The Sunday Business Post said Anglo executives planned to meet members of Irish parliament this week to present arguments in favour of retaining a rump of the lender.
(Reporting by Andras Gergely; Editing by Karen Foster)
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