Irish Nationwide, the lender led by chief executive Michael Fingleton, has acknowledged that nationalisation is a potential threat to its business. The lender, which faces re-financing challenges starting in May, said if it was nationalised it could become more difficult to deal with loan arrears and the controversial area of home re-possessions.

The warning is included in a 73-page document prepared for potential investors in a new securitisation of its residential loan book. The building society is expecting notes created by the securitisation to attract a triple-A rating from Fitch, the credit agency. The lender's board met on Friday and significant losses for 2008 were signed off on.

The building society, along with other Irish financial institutions, has set its face against any suggestion of nationalisation, claiming it is more pre-occupied with shrinking its balance sheet than its funding position. However, the building society must redeem a bond in May worth approximately €1bn and has other debt securities to redeem later in the year.

The lender, like other Irish financial institutions, is precluded from re-possessing homes within the first six months of arrears. The concern, at least for those buying any of the securitised notes, would be if re-possessions were banned for longer periods than this.

Irish Nationwide states: "In the event that Irish Nationwide took part in the government's recapitalisation process or was nationalised, it is likely that this moratorium would be extended to 12 months." It declined to comment last week on the likelihood of either event happening in 2009.