THE 11 banks and building societies operating in Ireland have written down almost €40bn of bad loans over the past two years of property and economic crisis, according to figures compiled by the Irish Independent.
The figure represents 7.5pc of a Bloxham Stockbrokers estimate of a total of €533bn of lending outstanding by the six state-guaranteed banks and the country's five main foreign-owned lenders.
It also equates to almost a quarter of the size of Ireland's economic output last year.
Nationalised Anglo Irish Bank tops the ignominious list, having written down €15.1bn of bad loans over the past two years.
Allied Irish Banks comes in second, at €7.2bn, while Bank of Ireland has set aside €5.5bn over the same period to cover mounting impaired loans on its balance sheet.
However, healthy levels of operating profitability among most of the banks have helped them absorb a large portion of the bad loan losses, before their capital reserves are eaten into.
For example, AIB turned in over €5bn of operating profits over the past two years. It reported a net profit of €729m for 2008 but swung into a €2.4bn net loss last year.
Sebastian Orsi, an analyst with Merrion Capital, expects that "2009 may go down as the worst year for loan losses among the remaining publicly-quoted banks".
However, he said he expected charges to "remain elevated as NAMA losses are crystallised and non-NAMA loans remain high, reflecting the continuing weak state of the underlying economy".
Most of the loan losses to date have been driven by the collapse in the property and construction market. However, analysts are now factoring in multi-billion euro losses across the system for mortgages, business loans and development loans that are not eligible for inclusion in NAMA.
Bad loan losses at Bank of Scotland (Ireland), a unit of Lloyds Banking Group, have topped the €3.9bn mark over the past two years, making it the worst affected foreign-owned lender.
Ulster Bank, part of the RBS group, has posted €2.7bn of loan losses over the same period, though a large part of that was for the so-called non-core unit -- effectively an internal 'bad bank' -- that the lender created last year.
Ulster, BoSI and ACC Bank, which is part of Utrecht-based Rabobank, have been bailed out to the tune of €7.2bn by their parents over the past two years.
The State is likely to end up footing the bill for the majority of the €32bn that Finance Minister Brian Lenihan signalled last week the State-guaranteed banks would need to raise to fireproof their balance sheets. Analysts in RBS said yesterday that they expected foreign-owned banks to continue to receive large capital injections from their parent groups in 2010.