Financial Regulator Matthew Elderfield has said further measures are under consideration to address market concerns about the possibility of further losses in Irish banks.

He said these measures could be described as 'overcapitalising' the Irish banks, adding that the measures taken so far had not been enough to restore market confidence.

Mr Elderfield told a conference in Dublin that a 'standby' facility could be considered to provide top-up funding to banks if estimates of their losses were revised, while there could also be immediate injections of money. But he warned that the balance between these options needed to be looked at carefully because of the implications for taxpayers and the public finances.

He said the Government's application for help from the EU and IMF meant that the capability to take these measures would soon be in place. Mr Elderfield also said progress could now be made on restructuring the Irish banking sector to a smaller size, probably involving the sale of some bank assets.

Mr Elderfield defended the financial targets set for the banks by the Central Bank earlier this year, saying the latest figures - including those on mortgage arrears - did not suggest that existing capital was inadequate. But he said market expectations for banks' funding had risen worldwide.

The regulator also said depositors could be reassured that the financial resources of European and international institutions would be in place to further support the banking system, in addition to the existing deposit insurance scheme.

Mr Elderfield said the Irish people were now paying a heavy price for the failures at the heart of banking.

Dukes urges 'massive and decisive' action

Anglo Irish Bank chairman Alan Dukes has told a conference on ethics in corporate governance that it is time for an open discussion on the structure of the banking system we should aim for.

He said there was a danger in the notion that not all of the EU/IMF package would be drawn down, as there was a strong case for taking massive and decisive action quickly to produce at least two viable banks for the Irish system. He said the sooner this was done, the sooner we could return to some sort of normality.

Meanwhile, the Dublin stock market closed down 1.5% this evening, with heavy falls in banking shares.

Irish Life & Permanent shares lost more than a quarter of their value, while Bank of Ireland fell 20%. AIB shares lost 6%.

After earlier gains, other European markets also finished lower as investors worried about whether the EU/IMF package for Ireland would bring an end to the euro zone's debt crisis.