'It can't get much worse'
Further resignations could follow after the Government warned that a series of scandals involving the country's two largest banks have damaged Ireland's reputation as a financial centre.
Taoiseach Bertie Ahern said the combined effects of the latest controversies on Ireland's financial services industry were horrendous.
Irish Financial Services Regulatory Authority chief executive Liam O'Reilly, also warned that recent developments in the banking sector were disturbing.
His comments followed the resignations of two of the country's best-known bankers on Saturday.
Former AIB chief executive Tom Mulcahy stepped down as chairman of Aer Lingus.
He was identified as being one of a group of former senior AIB executives who the bank had found to have "tax issues" following an investigation.
Just hours later, the chief executive of Bank of Ireland Michael Soden quit his €1.3 million-a-year position after admitting he had used his computer at the bank's headquarters in Dublin to access an internet site containing adult material. His actions were a breach of company guidelines.
Speaking on RTÉ Radio from Mexico, where he was attending a meeting between EU and Latin America leaders, the Taoiseach said that matters were "disturbing and upsetting".
"It can't get much worse," said Mr Ahern, who insisted full and thorough investigations were required to restore confidence to the banking sector.
Tánaiste Mary Harney told RTÉ's The Week in Politics last night: "We are talking about people here who had very important jobs. They abused those positions and the law should take its course in relation to these matters."
She contrasted the misconduct of senior figures with a bank clerk who would face the full rigour of the law for stealing €1,000 or €2,000 from the bank.
However, Labour finance spokesperson Joan Burton said senior Government ministers had also been "fatally compromised" by the latest AIB scandal.
She questioned whether, given AIB's role in the DIRT inquiry, due checks had been carried out on Mr Mulcahy to see whether he was tax compliant before his appointment as Aer Lingus chairman in 2001.
Fine Gael leader Enda Kenny said the scandals had left him "very angry" at their potential impact on the Irish banking industry, while Green Party finance spokesperson Dan Boyle said continuing bad practice by banks had highlighted the need for a commission on banking.
Mr Mulcahy announced his resignation on Saturday because of the adverse publicity being brought to bear on Aer Lingus. However, he insisted that he was "tax compliant". He also stressed he had no knowledge of a British Virgin Islands company called Faldor which his predecessor, Gerry Scanlan, and four other former AIB executives had used as an investment vehicle at the bank's expense.
AIB has refused to elaborate on the exact nature of the issues relating to Mr Mulcahy. However, the bank's chairman, Dermot Gleeson, has described the latest controversy as involving "completely unacceptable" practices.
Inquiries into a series of scandals at AIB by both IFSRA and an independent investigator are set to continue this week.
The board of Bank of Ireland will meet soon to announce Mr Soden's replacement.
The former bank chief claimed he had resigned for personal reasons, although he pointed out that the internet site he had accessed was not illegal.
In March, Bank of Ireland was forced to pull out of a multi-million euro deal with a British pornography distribution company because of growing public pressure on the bank.
The Irish Examiner highlighted its plans to provide a €7m loan agreement to Remnant Media, which published such magazines as Horny Housewives, Mega Boobs and Asian Babes.
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