The State is now likely to take majority ownership and full control of Irish Life and Permanent following the stress tests of banks.
Shares in the group fell by more than 45% to close at 40.5 cent in Dublin this evening.
RTE News understands the amount of capital required for the group's banking arm, Permanent TSB, is likely to be in the region of €600m to €1 billion. At present, Irish Life and Permanent is valued in the region of €200m.
A capital injection, which would be required by the State, is likely to force the organisation into State control.
The development will have no effect on customers. Depositors will continue to be covered by the State guarantee.
Irish Life and Permanent is made up of one of the State's largest life assurance companies, Irish Life, and the country's largest mortgage lender, Permanent TSB.
Finance Minister Michael Noonan is likely to make a statement which will include addressing the future structure of the banking system on Thursday.
The change in ownership of Permanent TSB would be likely to have significant ramifications for potential mergers in the banking sector.
A spokesman for the Department of Finance said it would not comment on reports about Irish Life & Permanent's capital requirements before the publication of the stress test results.
The spokesman also said the life insurance businesses of IL&P were profitable and performing well.
