Banks have yet to reveal the full extent of the chaos

THE lack of inter-bank funding may have precipitated the state’s €450 billion guarantee of bank loans and deposits last week, but it is far from the full picture.

No-one knows for sure how much bad debt the Irish banks are hiding, but the estimated figure continues to rise.

With the Government in no position to pump money into the banks as they have done in Britain and elsewhere, the banks will have no option it seems, but to issue shares to shore up their sinking balance sheets. Some weeks back, one estimate of bad debts in the banking sector over the next two years was put at €6bn, but the total figure could be as high as €20bn.