The chairman of Anglo Irish Bank has been forced to step down after it emerged that he sought to hide €87 million (£82 million) in loans from investors by transferring them temporarily to another bank.

The resignation of Sean FitzPatrick from Anglo Irish had a knock-on effect at Experian, where he is a non-executive director. The credit checking company said he had indicated his intention to resign.

Anglo Irish said that Lar Bradshaw, a non-executive director, who held a joint loan with Mr FitzPatrick, had also resigned from the board, even though he was unaware any transfer had been made.

The bank, which named Donal O'Connor, formerly senior partner at PricewaterhouseCoopers, as its new chairman, said that although the loan transfers did not breach banking regulations, they were "inappropriate from a transparency point of view".

Anglo Irish, which has informed the Financial Regulator and the Department of Finance about the matter, said that over a period of eight years Mr FitzPatrick had transferred loans out of the bank prior to the group's year end.

It said it had decided to initiate a formal review of governance, including the area of directors' loans.

Mr O'Connor said: "Sean FitzPatrick's decision to resign from the chairman's role brings to a conclusion a 33-year involvement with the bank.

"He has been a visionary driving force and has made an enormous contribution not just to the bank but to the business sector in Ireland. This is a sad day for Sean, his family, friends and colleagues."

Mr FitzPatrick became chief executive of Anglo Irish in 1986 and in his18 years at the helm was credited with transforming it from a minnow into the third largest bank in Ireland.

In a statement last night, Mr FitzPatrick said: "The transfer of the loans between banks did not in any way breach banking or legal regulations. However, it is clear to me, on reflection, that it was inappropriate and unacceptable from a transparency point of view."

He added: "One of the loans was a joint loan with Lar Bradshaw and I would like to emphasise that he had no knowledge of the temporary transfer of this loan."

The other bank involved in the loan transfer is believed to have been Irish Nationwide Building Society.

The resignations come as the Irish Government has pledged to inject up to €10 billion into the country's banking system.

Brian Lenihan, the Minister for Finance, said the changes at the bank would not disturb the "substantial progress which has been made with Anglo Irish Bank in relation to the recapitalisation programme".

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