THE Department of Finance is paying top-tier consultants McKinsey's thousands of euro a day to help with the merger of Anglo Irish Bank and Irish Nationwide and to "advise on a number of other system-wide issues".
But a department spokesman last night insisted that the State "continually works to ensure best value for money" and added that the banks involved would ultimately foot the consultancy bills.
The news comes after the Department of Finance's banking chief John Moran last week told the Public Accounts Committee that McKinsey had been retained to help with the Anglo/Nationwide merger.
Mr Moran didn't provide any guidance on the fees payable to McKinsey, but market sources confirmed daily rates range from more than €3,000 a day for "partner level resources" to over €500 a day for junior staff.
"They typically work in teams, so you'd have one partner-level resource assigned, maybe a manager or two and an analyst, then they charge a blended rate for the whole team," one well-placed source said.
The number of McKinsey staff involved on Anglo/Nationwide varies on a near-daily basis, depending on the demands of various projects, sources added.
The consultants have been on board for about six weeks, and may be used until the bank's merger is completed later in the year.
A Department of Finance spokesman said McKinsey's costs would be set out "in due course".
As well as working on Anglo/ Nationwide, McKinsey is also "advising on a number of other system-wide issues", the spokesman added, stressing that the work on other issues was "not as substantial" as the merger.
The spokesman denied suggestions that McKinsey had been drafted in because the Department of Finance's own banking team was too small or lacked expertise.
"We have a small, appropriately skilled team which we supplement with specialist support where a specific need arises," he said.
"Where the work is a short-term project it can be far more efficient to have the work done under short-term contract."
He also stressed that the work McKinsey was carrying out on the execution of Anglo and Nationwide was very specific, adding that the department "has not done a merger of two financial institutions for quite a degree of time".
The Irish Independent recently revealed that Goldman Sachs could receive up to €8m for providing advice to the National Treasury Management Agency.
As with the McKinsey bill, the fees will be re-charged to the banks themselves. This will provide little comfort to hard-pressed taxpayers, however, since most of the banks involved are state-owned.
The banks have also been racking up bumper bills for advisers, with AIB this week confirming it had paid €17m to Morgan Stanley in the first six months of the year.