Debt laden department store Arnotts is set to come under the control of Anglo Irish Bank and another lender.

The iconic Dublin store, which owes 260m euro, is to come under the control of the state owned bank and fellow lender Ulster Bank, according to a report this morning.

Anglo has told the EU Commission that it intends to have "joint control" over Arnotts, along with Ulster Bank, the Irish Independent reports.

The paper says that from this morning, the banks will take effective control of the store.

The store will open for business as usual and it says there is no threat to the jobs of its 950 workers.

Arnotts has not commented on the matter and Anglo Irish has also declined to comment, citing "client confidentiality".

The 260m euro debt to the two banks was run up by the store through its efforts to develop its proposed 750m euro Northern Quarter shopping, residential and entertainment precinct off O'Connell Street.

Earlier this year, Anglo and Ulster Bank injected more money into the business. Their motive for taking control now is likely to be to recover as much value as possible from it for the taxpayer. Sources tell the Irish Independent that this earlier debt deal will remain in place, but a wider restructuring is now on the cards. Arnotts is 55pc owned by barrister Richard Nesbitt and his family, with the remainder of the shares held by Anglo Irish and Boundary Capital. Earlier this year, Boundary said it was facing a virtual wipe-out on its stake. Because Anglo Irish Bank is state-owned, the EU Commission has to approve the deal and any objections have to be submitted by August 9.