NCB Stockbrokers has said decisions on the restructuring of the banks in the coming months will be crucial in determining whether Ireland can wean itself off aid from the EU and IMF by 2013.
NCB economist Brian Devine says it would be difficult for Ireland to avoid a further EU package if the money going into the banks ends up being much more than the €10 billion already earmarked to date.
The economist also says a 'meaningful' reduction in the interest rate being charged to Ireland under the current EU/IMF package would be a 'significant positive' for the Irish economy, banks and bonds.
Mr Devine warns, however, that any forced sell-offs of bank assets at low prices will eat into the capital positions of banks, meaning they need more funding.
He adds that he does not think it likely that senior bank bondholders will be forced to bear some of the banks' losses.
