The Irish government is this week moving the first loans into a 54 billion euro ($73 billion) "bad bank" scheme, and on Tuesday it will announce how much capital the banks will need to make up for resulting writedowns.

Newspapers reported the state could increase its stake in Allied Irish Banks to 70 percent from its current holding of 25 percent via preference shares, after the transfers to the National Asset Management Agency (NAMA), the "bad bank." ""We have to put the banks in a position where they can fund themselves with confidence in world markets," Finance Minister Brian Lenihan told public radio RTE.

Asked if he could envisage taking a majority stake in Allied Irish Banks or other lenders, Lenihan said: "Whatever is required to be done will be done by the Irish state." However, he said he would not detail his plans before Tuesday.

Shares in Allied Irish Banks closed down 19.6 percent at 1.365 euros, having fallen as low as 1.32 euros, and Bank of Ireland dropped 10.4 percent.

In Bank of Ireland, in which the government also has a 25 percent indirect stake plus 16 percent in ordinary equity, Lenihan could take a 40 percent ordinary stake, The Irish Times newspaper reported.

The two top banks have said they would try to raise capital privately first but authorities may impose tight deadlines for replenishing their capital which would require fresh bailouts.

Anglo Irish Bank, which was fully nationalized last year, has said it would need up to 9 billion euros of additional state funds. Building societies EBS and Irish Nationwide, also participants in NAMA, have also already requested state capital.

"EBS is in active discussions with the minister regarding the provision of capital from the State and expects to receive the capital shortly," EBS said in a statement.

It said the financial regulator had given it until the end of May to meet a requirement for a core tier 1 capital ratio of at least 4 percent as that will be restored through the bailout soon.