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AIB, BoI need €6.3bn

Analysts predict that the country's two largest banks, Bank of Ireland and AIB, will need to raise €6.3bn to increase their capital reserves.

Davy's analysts have predicted loan losses of around €14bn at AIB and €10bn at Bank of Ireland.

This equates to 12pc and 8pc respectively of loans, higher than many other European banks.

The economists have warned that a sale of the AIB's Polish business Bank Zachodni WBK "would generate a useful boost to capital in the short term, but retaining it may generate more through (earnings) retentions in the longer term".