It is alleged the Central Bank may have been aware of fraudulent transactions at Irish Life and Permanent and Anglo Irish Bank.

The Sunday Business Post reports that newly uncovered files reveal that a €7bn transaction was based on encouragement from the Central Bank for the institutions to help each other out.

The transaction has since been found to be fraudulent with three bankers convicted.

The paper says the documents reveal how the State had "intimate knowledge that the two banks were helping each other out" during the financial crisis in order to make their balance sheets appear stronger to investors and the stock market.

Tom Lyons is business editor with the Sunday Business Post.