Building society Irish Nationwide was forced to apologise last night after it was caught trying to exploit its State guarantee on savings to generate business in the UK.
Central Bank Governor John Hurley said it was unacceptable for the society to promote the guarantee to drum up business in Britain.
And the Financial Regulator said it was investigating the matter.
In a statement, regulator boss Patrick Neary said: “It is inappropriate to use the guarantee in marketing, advertising or any communications to customers or potential customers. All firms have been advised of this matter.”
The controversy was sparked by an e-mail sent by the son of Irish Nationwide boss Michael Fingleton seeking deposit business in Britain on the strength of the Government’s move to guarantee deposits in the Irish banking system.
Irish Nationwide said yesterday the email was “inappropriate and regrettable in the circumstances”.
But it had no comment on an interview given by Michael Fingleton Senior to the BBC on Tuesday, the day the guarantee was announced, saying the society was planning to use the Irish State guarantee to tout for business in Britain.
Mr Fingleton told the BBC: “We are planning to launch an advertising campaign in the next couple of weeks, in the papers.
“We’ll be emphasising that the rates are guaranteed by the Irish government.”
The Labour Party’s Joan Burton joined in the criticism of Irish Nationwide accusing it of abusing the guarantee scheme.
Deputy Burton said the email sent to British customers of Irish Nationwide raised serious questions about promises given by the domestic banks not to abuse the State support scheme.
“I am sure that officials of other institutions will not be so imprudent as to put their comments in writing, but what possible steps can the government take to prevent this selling pitch being made verbally?
“The last thing we want from the guarantee scheme is a flood of hot or dubious money into Irish banks. Nor is it in anyone’s interest for us to have vast sums being lodged in Irish accounts only to be withdrawn weeks or even days later.”
Michael Fingleton Jnr sent the e-mail to a friend from the Irish Nationwide’s London office stating that Irish Nationwide represented the “safest place to deposit money in Europe with an AAA guarantee from a country with the lowest national debt to GDP ration of any AAA country”.
The e-mail said that deposits attracting fixed term interest rates of 6.75pc and 7.1pc were guaranteed regardless of size and represented the best value in the UK market.
The e-mail continued: “Please be so kind as to pass on to friends, colleagues and clients as you see fit.”
The terms guarantee and guaranteed are used six times in the e-mail.
Banking sources said this term was particularly sensitive because of the negative connotation implied for the British banking sector which is not subject the same level of Government guarantee as the Irish-owned banks.