Ratings agency Standard and Poor's has said it believes Irish banks will need to raise additional capital.
In a new report, the agency said it can not see the Government being able to quickly exit or reduce its support for the banks.
Despite €64 billion in funding from the state, Standard and Poor's said it is not convinced the Irish banks are out of the woods.
Nigel Greenwood, primary credit analyst with S&P, told RTÉ News that mounting losses on business lending and mortgage loans would put pressure on bank balance sheets.
In combination with the requirements to meet new regulatory standards now coming into force, he said it was increasingly likely that fresh funds would be required.
S&P has predicted that the banks will report more losses this year and next year. It also warned of the risk that banks have not sufficiently provided for those losses in the assumptions they have made on SME and mortgage debt.
Mr Greenwood said the results of fresh Central Bank stress tests - due later this year - will give everyone a clearer picture of where the Irish banks stand.
The S&P report, entitled ''The ongoing ties between the Irish Sovereign and its banks'', said that 2013 will be another challenging year for the Irish banking industry. It added that it believes the ''very close relationship'' between the State and the the banks will continue to several years.
On a brighter note, the report states that the Irish economy is showing signs of a modest recovery, led by improving exports that have been supported by competitiveness gains in recent years. But it notes that fiscal consolidation, weak investment, labour and property markets will continue to weigh on Ireland's growth prospects.
The credit ratings agency also said that Irish property prices will fall by just 1% this year, and will be flat next year. It said it was seeing "some nascent encouraging signs in the residential property market, with recent evidence of price rises in Dublin''.
This compares with recent predictions from Fitch rating agency of another 20% fall in residential property prices.
However, because of the severe disruption ot the property market, S&P said it was not factoring into its analysis what it called ''a conclusive bottoming out of the market'' this year.
For commercial real estate it sees valuations as highly asset-specific, with pricing for top quality assets showing resilience, but possible further declines for poor quality or badly located properties.
The agency is maintaining the country's rating at BBB+ with a negative outlook, but said it could remove the negative outlook if there was a deal to refinance the promissory notes on less onerous terms.