There's something rotten in the heart of Bankcentre. The news last week that the bank needed a further €3bn cash injection from the government because it had underestimated – yet again – the scale of its losses from the transfer of property loans to Nama shows AIB's continuing failure to grasp the reality of the property bust. Is it merely head-in-the-sand stuff, incompetence or arrogance born of the knowledge that, no matter what, the state will step in to save it?

It's two years this week since the Sunday Tribune revealed that the banks were avoiding getting formal valuations of property in order to avoid writing down the loans. In addition, this newspaper later reported that AIB was among the worst culprits in terms of the valuation processes that had been used when deciding on loan requests from developers. In many cases a bank only required a spreadsheet from a valuer, and the document could have been changed by a potential client in order to secure extra funding.

In November of last year, the message still hadn't set in. AIB's board said that there was "no reason to believe that the average discount applicable to AIB's Nama assets will fall significantly outside" of the finance department's guidance of an average discount of 30%. Who were they kidding? Then came the news that €500m of AIB loans to Liam Carroll were being transferred to Nama at a valuation of zero because the proper legal documentation could not be provided.

To date, AIB has transferred more than €6bn of loan assets to Nama at an average discount of 45%. The estimated discount on the remaining €13.5bn of loans to be transferred is 60%. Would it have been even worse if the lowest loan limit for transfer to Nama had not been raised to €20m from €5m last week?

How can a board be so wrong? And why did they not resign en masse last week when the institution was basically nationalised?

AIB's attitude was summed up in its first-half results for 2010 when it valued a package of its Nama-bound loans at €1.9bn, just 12 days before they transferred to the asset-management agency for €1.4bn. Think about that for a second. Almost two years into the financial crisis, AIB was valuing its property loans at a third more than their actual value. Is this even credible?

AIB has always known that the state would bail it out, and has acted accordingly. Its self-professed entrepreneurial culture involves more risk taking than it should and history has taught us it does not learn lessons from its past failures. The bank cannot continue in its present form. A break-up must now be considered.