Anglo Irish Bank has lost its bid to foreclose on a prime property in Cambridge, Massachusetts, after a US judge found in favour of the property owner, in a case that suggests the nationalised bank will have a difficult time recouping money from its American clients.

The bank is now barred from instigating repossession proceedings against One Kendall Square, a lab, office and retail complex near Harvard University. Anglo was trying to seize the property after claiming its owner, RB Kendall Fee, was in breach of its loan agreement. RB Kendall Fee countersued, claiming it was fully paid up on the mortgage. It is understood the bank was trying to reclaim the property on the basis that its value had fallen below the required level for the loan to be performing.

Anglo has more than €3bn in outstanding high-quality loans in the Boston area, including the Thomson Reuters headquarters and a portfolio of properties in the upmarket Newbury Street area.

The bank is embroiled in the bankruptcy proceedings of former chief executive David Drumm, who has sought protection in the Massachusetts courts to avoid paying back over €8m in loans he owes his former employer.