Ireland should consider shutting down nationalised Anglo Irish Bank over a period of about five years, the Green Party, the smaller member in the governing coalition said on Monday.
The comment from Green Party chairman Dan Boyle followed a newspaper report on Sunday that the plan to carve out a substantial so-called good bank from Anglo Irish was facing opposition from the Greens and the European Commission.
What we are not saying is that there can be an immediate shutdown of Anglo, that is still by far the most expensive option, Boyle told public radio RTE.
He said the wind-down period should be less than 10 years.
Any orderly wind-down of a bank will take at least four or five years, Boyle said.
The rising cost of rescuing Anglo Irish Bank pushed Ireland back into the centre of the euro zone debt crisis this month and its sovereign bond prices could fall further if the bank's rescue plan failed to clear political or regulatory hurdles.
Anglo Irish, taken over last year after exposure to a property market crash and several loan and deposit scandals, is moving half its loan book to Ireland's state bad bank scheme, the National Asset Management Agency (NAMA).
It has proposed to divide its remaining assets into a good and bad bank of its own, with the good unit taking assets worth 10-15 billion euros (6.4-9.6 billion pounds).
Chief executive Mike Aynsley said on August 5 he expected to agree in principle with the European Union in September on the plan to split the bank into two.
Boyle said the higher-than-expected discount NAMA has demanded on Anglo's loans showed the good bank-bad bank split might also be more costly than originally thought.
Management in Anglo Irish are both trying to cooperate with NAMA and promote this idea of a good bank which I think is dividing their attentions, Boyle said.
When cutting Ireland's credit rating to AA- last week, Standard & Poor's cited the cost of the Anglo Irish rescue, which it put at 35 billion euros, 10 billion more than earmarked by the government.
Boyle said Ireland should cooperate with the European Commission and the European Central Bank to make sure a wind-down of Anglo would not endanger other Irish banks and the ability of Ireland itself to borrow.
(Reporting by Andras Gergely; Editing by Dan Lalor)