Britain's Lloyds Banking Group said today it expected bad Irish loans to cost the lender £4.3 billion pounds (€5 billion), nearly three times an earlier estimate.
This came as the chief executive of National Irish Bank said bad debts would remain high next year.
Lloyds Banking Group, which was bailed out by the UK taxpayer, had put the cost of its Irish loan losses at £1.557 billion earlier this year.
'The board anticipates that, compared to June 30 2010, approximately a further 10% of the £26.7 billion Irish portfolio will become impaired by the 2010 year end,' LBG said in a statement.
'Furthermore, the board believes that it is prudent to increase the level of provisions against the portfolio, and currently anticipates an increase in the impairment charge relating to Irish exposures for the full year 2010 to approximately £4.3 billion', the bank added.
The announcement came after Moody's slashed its credit rating on Ireland by five notches.
The bank said that since November, it has seen a further significant deterioration in market conditions here, with concerns over the country's fiscal position leading ultimately to the approval of its application for EU-IMF financial support on 21 November.
'Market sentiment has continued to be negatively affected by uncertainty about the political situation and about the economic impact of the austerity measures introduced in the Budget,' it added.
'We are concerned that any economic recovery in Ireland may take longer to achieve, and that asset prices will remain depressed for longer, than previously anticipated,' today's statement added.
