A major investigation has been launched into how former Irish Finance Minister Charlie McCreevy obtained a massive €1.6m Irish Nationwide loan to buy a luxury apartment in the K Club.

The Irish Independent has learned the EU Commissioner purchased the property in 2006 at the height of the boom after borrowing funds that exceeded the value of the property. The property is now worth only around half the price he paid for it.

The revelation of the financial transaction came after Mr McCreevy was named in an RTE Prime Time Investigates programme as being one of several high-profile Fianna Fail politicians who were given huge mortgages from Nationwide with minimum paperwork involved. The €1.6m loan was granted to Mr McCreevy even though the trophy home was worth €100,000 less than that at the time.

The loan was granted by then-chief executive Michael Fingelton, even though the building society's own guidelines did not allow it to grant 100% mortgages.

The Financial Regulator's office last night confirmed it would be carrying out an investigation into lending practices at the building society.

Mr McCreevy's spokesperson refused to comment on the loan or say where the EU Commissioner currently is.

The 20-year mortgage for the K Club property was drawn down in September 2006 by Mr McCreevy and his wife Noeleen.

The Co Kildare properties were among the most highly sought-after homes sold during the Celtic Tiger boom.

Labour finance spokesman Joan Burton said taxpayers needed answers about the “cosy relationship” as €8bn of Irish Nationwide loans are to be covered under the National Asset Management Agency.

Irish Nationwide said it would carry out a probe into issues raised on the Prime Time programme.