Finance house Irish Life & Permanent tonight bowed to pressure from the Government, accepting the chief executive's resignation.
The IL&P board initially refused to accept Denis Casey's wish to quit following a scandal over an apparent €8.2bn deposit in its troubled competitor, Anglo Irish Bank.
However, under private and public pressure from Finance Minister Brian Lenihan, IL&P chiefs were forced to let a third senior executive stand down over the controversial money moves.
"Last night I stated that the board of Irish Life and Permanent must discharge its responsibilities in relation to the serious matters that have arisen," Mr Lenihan said.
"I welcome Mr Casey's decision to resign from his position in the Group. This is an essential first step in repairing the reputational damage done to the Irish financial system by this transaction."
The transactions were identified by PricewaterhouseCoopers after it inspected banks involved in the Government's deposit guarantee scheme last October.
Mr Lenihan admitted he did not read the auditors' full report and only became aware of the scale of the payments in January.
The multi-billion euro lodgements further tarnished the already crisis-hit Irish banking sector with politicians and experts talking of "cosy cartels" and "golden circles" in the once proud Dublin finance sector.
Anglo-Irish Bank is at the centre of these criticisms. The lender was nationalised last month after it emerged chief executive Sean Fitzpatrick took out more than €120m in secret directors' loans.
IL&P chairwoman Gillian Bowler and other non-executive directors met Mr Lenihan for an hour tonight - the second time in 24 hours they were summoned after rejecting advice to accept Mr Casey's resignation.
He is the third casualty from the IL&P board.
In a dramatic statement at 3am on Friday, after nine hours of ministerial talks and board meetings, the company announced group finance director Peter Fitzpatrick and head of group treasury David Gantly were quitting.
The executive trio have taken the fall over the €8.2bn in highly irregular deposits paid into the now nationalised Anglo-Irish Bank in a so-called "bed and breakfast" scheme temporarily boosting the rival's books.
Ms Bowler said she was accepting the chief executive's resignation with the utmost regret and added: "Denis Casey is a man of the highest integrity and honour.
"I have always held him in the highest regard as a colleague and as a friend and I know that his decision today - as always - has been prompted by his dedication and loyalty to the company."
IL&P claimed the only motivation behind the money moves was to assist the wider banking sector after a call for support from Ireland's Financial Regulator and the Central Bank.
It is understood some of the massive transactions were not cleared by the IL&P Board.
Although auditors spotted the €8.2bn moving in and out of IL&P and Anglo they did not flag it up as unusual to Department for Finance officials and Mr Lenihan said he was unaware of it for two and a half months.
IL&P detailed the unusual Anglo transactions which occurred in March and September last year:
An overnight deposit, €750m, was paid in March following a request from Anglo and a €1bn cash payment into Permanent TSB, a branch of IL&P.
Six months later, Anglo came knocking again. IL&P paid €3.45bn in five separate deposits between September 26-29 while a similar sum was lodged in Permanent TSB.
The transactions matured on October 2 and 3.
Three further requests for money on September 29 were refused as Anglo offered nothing in return, and
The next day, as the Government introduced its bank guarantee scheme, Anglo asked for, and got, €4bn from IL&P and received the same amount from Permanent TSB for one night.
Mr Lenihan's aides knew about the massive deposits in late October, and informed the Financial Regulator, but he was kept in the dark for more than two months.
The minister has faced repeated calls to resign over the communications lapse.
It is the second controversy surrounding Anglo money deals followed by lapses in communication.
Outgoing regulator Patrick Neary resigned in December in the wake of the Sean Fitzpatrick loans fiasco, insisting he was not told for nearly a year about the secret deals.