Tonight, the Minister For Finance concluded a round of meetings at Farmleigh House in the Phoenix Park with executives from banks and building societies covered by the State guarantee scheme.
Their discussions have raised the possibility of a historic and radical overhaul of the banks.
The Government is understood to believe merging financial institutions is the best way forward.
After the meetings, some participants believed only Bank of Ireland and AIB would remain after the shake up.
A spokesperson for the Department of Finance confirmed that dialogue had taken place between the Minister and the Chairmen and Chief Executives of the banks.
The Minister requested that the banks reflect on the discussions and meet next week.
The suggestion of a major wave of consolidation would also have to be linked with fresh capital for the banks.
But there is still no clear picture of how a final deal would be put together or how long it will take.
While uncertainty has reigned, the bank share prices have been pushed up and down.
Investors remain in limbo as the future of shape of Irish banking remains unclear.
The one-to-one meetings come in the wake of the PricewaterhouseCooper report on the future debts and capital requirements for institutions covered.
There are six Irish financial institutions covered by the scheme, which was announced by the Government in September.
Speaking this afternoon, Minister Lenihan said he had spent the morning discussing the difficulties and the banks' plans to overcome those difficulties.
The Minister said the Government was determined to reform the banking sector and to ensure there was credit for those with small and medium sized businesses.
The meetings come as world markets have tumbled following sharp overnight losses on Wall Street prompted by a fresh wave of jobs cuts in the US and another gloomy economic outlook.
Elsewhere, the International Monetary Fund has approved a loan of more than $2bn to Iceland to help it cope with what it has described as a banking crisis of extraordinary proportions.
Iceland asked the IMF for help after its banking system collapsed last month.
