Central Bank Governor Patrick Honohan has said Irish banks are likely to face higher potential loan losses after a review due to be carried out before the end of March.
Professor Honohan told the Reuters news agency the prospective loan losses 'will probably be a little larger', saying this would not be surprising due to the weaker economic statistics since the bank's last review of the banks' finances in March 2010.
The central bank will complete its second capital review of the banks and a review of their liquidity requirements by the end of the first quarter.
Irish banks' spiralling property losses and inability to raise funds on money markets forced Ireland to ask for an EU/IMF bail-out late last year. €35 billion is earmarked for the banks under the bail-out programme, which is aimed at weaning Irish banks off their dependence on ECB funding and exceptional loans from the Central Bank.
Professor Honohan said Ireland had not yet convinced markets that it had got to the bottom of the banks' losses, but providing clear information about their portfolios should help soothe concerns.
'What we are trying to do is to get precision. It's much more important to get precision than to land on a particular number. If we achieve that we will go a long way towards getting to the situation where the banks and the government can return to the market,' he said.
The Central Bank Governor also told Reuters he did not see 'any traction' around the idea that senior bank bondholders should share some losses, because other European countries were opposed to the idea.
