Lax oversight by regulators and the government, flawed lending decisions by the banks and an “unquestioning consensus” regarding a likely soft landing in the property market were the main reasons behind the collapse of Ireland’s financial sector, Finnish banking expert Peter Nyberg has concluded.

He also found a "tendency to 'groupthink' " may have resulted in "contrarian views" being ignored or suppressed, while a "herd" instinct resulted in some banks setting aside their normal governance procedures in a bid to match the growth of Anglo Irish Bank and Irish Nationwide and retain their key customers.

Mr Nyberg's report, published yesterday, stops short of pointing the finger of blame at any individuals for the financial crisis here. He says "large parts of Irish society were willing to let the good times roll on until the very last minute".

Mr Nyberg was asked by the last government to look into the causes of the banking crisis from January 1st, 2003 until January 15th, 2009, the day Anglo Irish Bank was nationalised.

While more than 140 people were interviewed over a six-month period, Mr Nyberg took the decision not to identify any individual in his report. Instead, he concentrated on the macro issues that resulted in the boom and bust of the Irish property market and provided commentary on the government's handling of the crisis.

While the severity of our financial crisis was "exacerbated" by the global credit crunch, the main reason was the "unhindered expansion of the property bubble", financed by the banks using cheap wholesale market funding, along with loose government policies and light touch regulation, he said.

Mr Nyberg said "irrational forces" were also at play during the boom years and highlighted a "national speculative mania . . . centred on the sale and acquisition of property".

"Warning signs were ignored as continued economic stability was confidently assumed," the report stated.

He found there was sufficient data for the regulators to prevent the crisis from unfolding. But he said the "relaxed attitude" of the oversight authorities was the result of either a "failure to understand the data" or them "not being able to evaluate and analyse the implications correctly".

Mr Nyberg found that the Financial Regulator was often "fobbed off" by the banks. "There were numerous instances of non-compliance with respect to banking regulations and guidelines, which went unsanctioned by the Financial Regulator."

Mr Nyberg found that in some cases involving Anglo and Irish Nationwide, there was "little follow through" by the regulator. "It seems remarkable that the Financial Regulator in practice accepted the severe governance problems in INBS [Irish Nationwide]," he said.

He was also critical of the Department of Finance, which abrogated its obligations in relation to financial stability to the Central Bank and the Financial Regulator.

"Had the Department of Finance taken a greater interest in financial market issues early on, preparations for dealing with the financial crisis would have been more comprehensive."

Mr Nyberg was critical of banks' management for "embracing a lending sales culture at the expense of prudence and risk management". He also questioned the bonus-led remuneration system that was in place.

Non-executive directors had "insufficient" expertise on the lending and funding risks inherent in banking, the report found.

The Finn, who spent 25 years with his country's central bank, said the focus of auditors' work was too narrow and backward-looking.

But Mr Nyberg stopped short of suggesting that "financial professionals in Ireland consciously decided to let banks get into trouble".

Mr Nyberg said the bank guarantee decision was based on "deficient information" and was based on there being no "major solvency problems".

But he said it would have been "useful" to access "temporary funding" to examine alternative approaches.

"Crisis management in Ireland was rendered less than fully effective by long-standing insufficient appreciation of bank exposures on the part of all the authorities."

He said the nationalisation of Anglo, just three months after the guarantee, did little to build "market confidence" in Irish banks or government policy or forecasts, with the result that doubts about our credibility began to "crop up".

The report also said the media paid "relentless" attention to the property market, "lauded" Anglo Irish Bank and were "dismissive" of warnings about the bubble economy.

Shortly before the report was published, AIB announced that three board members, appointed in 2007, will not seek re-election to the board this year.

Minister for Finance Michael Noonan said all financial institutions covered by the bank guarantee scheme are to be asked to provide a "board renewal plan".

Fianna Fáil finance spokesman Brian Lenihan said he agreed with the report's finding that there was a "systemic failure of regulation and oversight". "The report is a direct challenge to what it shows to have been a wide consensus through that period which looked at the property market primarily in terms of the need for more houses and expectations of rising prices," he said.

Sinn Féin finance spokesman Pearse Doherty described the report as a "catalogue of complete failure across the board" which found that Government policy "added to collapse in the banking sector".