The former finance director of Anglo Irish Bank has been arrested by fraud squad officers investigating financial irregularities at a bank.

William McAteer is being questioned by detectives from the Garda Bureau of Fraud Investigation.

He is being detained at Irishtown Garda Station, where he can be questioned for up to 24 hours.

It is the second time he has been arrested in connection with the ongoing investigation into alleged financial irregularities at Anglo.

McAteer, who is in his sixties, was arrested at his home in Rathgar, south Dublin, as part of a probe by the Office of the Director of Corporate Enforcement.

It is investigating whether Anglo Irish Bank used more than €7bn (£6.1bn) of short-term deposits from Irish Life & Permanent to mask big customer deposit withdrawals.

Corporate watchdog Paul Appleby is heading the near three-year probe into the bank's dealings in the lead-up to its collapse.

He recently revealed a third file on suspected fraud at the rogue lender has been sent to the Director of Public Prosecutions (DPP).

The reports related to a specific loan given by Anglo to a former director and details of the €450m (£395m) loans-for-shares deal.

McAteer, who was also chief risk officer at the now nationalised lender, is the second Anglo executive to be quizzed by fraud squad officers.

Ex-Anglo Irish chief Sean FitzPatrick was previously been detained by investigators.

Bailing out the lender, renamed Irish Bank Resolution Corporation Limited, is costing Irish citizens a near €30bn (£26.3bn).

It dramatically reduced losses to just over €100m (£87.8m) in the first half of the year, down from the record-breaking €8.2bn (£7.2bn) it suffered in 2010 — the worst in Irish corporate history.

Meanwhile the Government has been urged not to allow the repayment of a €715m (£617.7m) Anglo Irish Bank bond — to unsecured, unguaranteed bondholders — which is due today.

The European Central Bank, which has provided ongoing funding for the Irish banks, wants the bondholders repaid.

Anglo, which went bust in 2009, does not have an integral role in the banking system in Ireland as it no longer has deposits, it is not lending and the bonds it is repaying are not guaranteed.

Bondholders are institutions, from blue chip banks and corporations to pension funds, that lend money to countries in return for regular interest payments. The identities of the Anglo bondholders are unknown.

Anglo Irish Bank was nationalised after its lending contributed to the collapse of the Irish economy. Some €29.3bn (£25.7bn) has been pumped into the bank by the Irish Government.