Anglo Irish Bank is now facing the prospect of being wound down over a 20-year period, following a significant shift in the Dublin government's position.
This means that up to €22.3bn of taxpayers' money -- €12.3bn that has already been pumped in and a further €10bn that is earmarked for the bank -- is unlikely ever to be recovered.
Anglo and its advisers are looking at the costs of running down the bank over two decades as part of a series of options under a revised restructuring plan, the Irish Independent has learned.
The revelation comes just a month after Finance Minister Brian Lenihan said he "could not countenance" closing the bank.
He said: "I understand why many want us to close this bank. But I cannot, as Minister for Finance, countenance such a course of action."
Meanwhile, the EU Commission has criticised the idea of splitting the bank into a so-called 'good' and 'bad' bank.
An original plan, filed with Brussels in November, looked at three key scenarios: immediate liquidation; winding the bank down over 10 years; and splitting the bank into an internal good and bad bank.
But now a 20-year wind-down is also being costed before the reworked plan is filed with the European Commission late next month.
It is unlikely that the €12.3bn that taxpayers have already pumped into Anglo and the €10bn earmarked for the bank will be recovered in that event.
It is believed that Anglo's new bosses still see a good bank-bad bank split as the preferred and least costly option for taxpayers. This would see the bad part wound down over time, with the good element becoming a viable lender to a credit-starved economy.
The Government is unsure how a wind-down of the entire bank over 10 to 20 years would work. The fear is that huge amounts of its depositors and wholesale funders would be prompted to stop doing business with a bank that was seen as having no future.
Mr Lenihan was accused yesterday of changing his stance on the winding down of the bank.
However, Tanaiste Mary Coughlan insisted that government policy had not changed on the now-nationalised bank.
She said a plan on Anglo had gone to the European Commission and was being considered.
But Fine Gael leader Enda Kenny said Mr Lenihan's stance had clearly shifted in the past four weeks.
"The Minister for Finance, Deputy Lenihan, when addressing the House on March 30, 2010, stated in respect of Anglo Irish Bank that winding up that bank is not and was never a viable option," he said.
"In response yesterday to a question from Deputy (Joan) Bruton, the minister clearly indicated he is now considering a wind-up of Anglo Irish Bank and a break up of that bank into a good and bad bank."
The filing of the updated version of the restructuring plan has been pushed out by three weeks to the second half of the month, as a raft of external advisers to the nationalised bank, the Government and the Financial Regulator cross-check the costs of all the options available to the embattled lender.
They have been working since January on answering more than 100 questions posed by Brussels.
Sources said the injection of €8.3m of emergency rescue aid into Anglo last month led to a large problem. It triggered an automatic review of Anglo's case, even as the second version was only being drafted.
Under figures prepared by Anglo itself, an immediate liquidation would cost more than €100bn, while a 10-year wind-down could cost anything between €50bn and €60bn.
Source Irish Independent