Anglo's new chief executive Australian Mike Aynsley, who parachuted in to clean up the mess, is understood to have said privately that a short- to medium-term wind-down of the group "would lead to an incineration of taxpayers' money".
The idea of the new Anglo piling back into property lending is likely to set off alarm bells among politicians and the public. But EU restructuring rules do not allow bailed-out companies to set out aspiration business models that deviate entirely from their origins.
Supporters of the plan argue the State would need a prudently run commercial property lender to fund future transactions as the National Asset Management Agency (NAMA) -- which is taking on more than €80bn of risky property loans -- looks to dispose of assets over time.
"NAMA -- and the broader property market -- face a huge problem if nobody is willing to fund the purchase of property (that the agency) will be seeking to sell," said one source.
After Anglo transfers €28bn of loans to NAMA, its internal 'bad bank' would take over the bulk of its remaining €44bn portfolio -- and essentially become an asset management company, similar to those set up by other embattled banks across Europe, including Northern Rock.
Ross Abercromby, an analyst with Moody's, the credit agency, said: "Our assumption in a 'good bank'/'bad bank' split is that any liabilities ranking below senior debt would be left with the 'bad bank', leaving losses to be absorbed by subordinated debt holders.
"In the case of Northern Rock, all of the debt was left with the 'bad bank' (Northern Rock Asset Management), albeit the senior debt is now guaranteed by the British government."
Sources say Anglo's plan is to move deposits to the 'good bank', which would be totally rebranded. Mr Abercromby said that this would lower Anglo's overall capital requirements as the 'bad bank' "would no longer be a deposit-taker and it would not be carrying out new lending -- similar to the case with Northern Rock Asset Management".
Holders of Anglo's riskier -- or subordinated bonds -- would be lumped into this asset run-down company and forced to absorb a large part of the bad loans' losses coming down the tracks, according to sources.
This would lower the additional capital requirements from the State. But Mr Abercromby noted that the first trick to play with these debt holders -- not paying coupons on subordinated debt, where legally possible -- "has already been done at Anglo". Another source noted that a workout plan for Anglo's 'bad bank' must be aligned with NAMA for either to work.
"Any attempt by NAMA to put a floor under a non-functioning market would fail if a major property lender was conducting an asset firesale at the same time," he said. It is understood the Government aims to sell a rebranded 'good Anglo' in five years' time -- in the hope of further clawing back the billions it has pumped into it.
Still, Anglo and the Government face a tough task demonstrating that the plan can result in the group repaying taxpayers' money after five years, as necessitated by EU state-aid rules.
Brussels, which has been taking a tough stance on other rescued European banks, will ultimately decide whether it stacks up or not.