Anglo chief Mike Aynsley

A 20-year wind-down of Anglo Irish Bank is not a realistic option for the nationalised lender and is only being considered as part of a due diligence process to satisfy queries put to the Anglo board by the European Commission, according to informed sources.

Sources said Anglo Irish Bank's original business plan was rejected because it was too "aspirational" in terms of diversification into new lines of business, which the commission regarded as anti-competitive. The November plan envisioned splitting the bank into a 'bad' Anglo asset run-off vehicle and a 'good' bank which would function as an SME lender, forming part of a larger full-service banking group. But the commission told the bank it could not use state aid to build new capabilities and reposition in the market. Instead the bank had to stabilise itself for a sale or a return to private ownership as soon as possible.

It is understood the commission only asked Anglo to explore the cost and other implications of a 20-year wind-down, among several scenarios, because this was part of the framework the EU used for assessing the business plan of Northern Rock, the UK mortgage lender which was nationalised in 2007.

Informed sources said there is no scenario which will see the bank pay back all of the €22bn of emergency capital it will ultimately receive from the state.

The bank is working on a revised business plan after the one it submitted to Brussels in November to comply with EU state aid rules was sent back in February with a list of 101 questions Anglo and the Department of Finance needed to answer to get final sign-off. The process was delayed further when the department had to get permission to inject a further €8.3bn, which was considered emergency aid, into the bank retroactively in March.

It is understood the Anglo board still prefers a good bank/bad bank split, but that it will step back from its original ambitions to focus instead on reducing its defunct commercial property lending and increasing its emphasis on the existing corporate banking book, which accounts for 14% of the bank's loans.

The board sees the bank going forward with a loan book of less than €20bn and taking part in the consolidation of the banking sector rather than remaining a stand-alone lender.