The bank yesterday confirmed that an employee at its College Green, Dublin branch was suspended last week.

"In conjunction with the gardaA-, Bank of Ireland has commenced an investigation into the theft of money at the College Green branch, " said a BoI spokeswoman. "The individual concerned will remain under suspension until the investigation is complete."

The spokeswoman could not say how long the probe would take. While she refused to divulge any further details, claiming it was an internal matter, it is understood the investigation concerns a young male cashier who dealt with customers over the counter.

It is unclear at this stage whether the theft involved actual cash being handed over the counter or whether it involved switching money from one account to another.

While banks are prone to theft by staff, it is understood the ingenious nature of this scam, and the difficulties in detecting it, have caused serious concern in senior management at Bank of Ireland.

When the cashier was suspended last week, staff were told it was a very serious issue and were under strict instructions not to talk to the media.

The scam will be an acute embarrassment to Bank of Ireland, which is already immersed in a bitter row with staff over plans to cut pension benefits.

Bank of Ireland's main rival, AIB, was embroiled in a major scandal five years ago when an employee at its US subsidiary, Allfirst, John Rusnak, lost Euro521 million in unsanctioned trading on the stock market.