The head of the National Treasury Management Agency (NTMA) is accusing State Street Bank of fraud.
John Corrigan made the claim during an appearance at the Oireachtas Public Accounts Committee (PAC) today.
He says the €3.2 million was improperly taken but has since been recouped.
It related to commission on the sale of €4.7 billion of assets from the National Pension Reserve Fund.
The sale was a requirement under the bailout programme to help in the recapitalistion of the Irish banks.
The NTMA Chief Executive says Gardai and the British Financial Services Authority are investigating.
"Fraudulently - in our view - within State Street there was 0.7% approximately clipped off the sale prices that they got when they went out on to the open market to transition these shares" he said.
Mr. Corrigan also says the bank is denying it amounts to fraud and that the matter is not over.
"We have accepted the payments which State Street have given us - we have accepted those without prejudice".
"And we have indicated - quite forcibly to State Street when I met them - that the overall relationship, including whatever compensation we might seek, remains unfinished business" he added.
The bank employees over 2,000 people in Ireland having entered the market in 1996.
It has offices in Dublin, Drogheda, Kilkenny, and Naas and services more than US$600 billion in assets for clients.
The group has US$4.6 trillion in assets under custody and administration and has representation in 11 European countries.