A UK subsidiary of Anglo Irish Bank lost £613m (€715m) in a series of yen currency trades stretching from May 2008 to January 2009.
The loss occurred as the bank tried unsuccessfully to take advantage of the difference between the sterling and yen interbank lending rates in an attempt to reduce its overall funding costs, recently published accounts reveal.
Anglo Irish Asset Finance, the UK commercial property arm of the bank, entered into a series of so-called foreign exchange "carry trades" last year.
The plan was to sell low-interest rate yen and buy higher-yielding sterling and pocket the difference. But the transactions turned sour when sterling weakened unexpectedly against the Japanese currency, leaving Anglo in a hole.
The bank, then still headed by chief executive David Drumm, was struggling to maintain funding lines, as global money markets tightened and creditors became reluctant to lend to Irish banks.
The huge loss, however, did not appear separately in the consolidated interim accounts for Anglo Irish Bank Corp, as gains on transactions by other subsidiaries – plus a tax writeback – allowed the bank to book a small trading gain for the six month period to 31 March.
The bank did signal in its annual results last, however, that a currency loss was likely in 2009.