There will be no further call on the Irish taxpayer to bail out the banks following the results of the ECB stress tests, which showed that Permanent TSB failed one part of the comprehensive assessment.

The ECB saw far less demand than expected yesterday for its new four-year loans to banks, raising doubts about a stimulus package it hopes will stave off deflation and revive the eurozone economy.

European banks have a capital shortfall of as much as €767bn, a study suggests, as the ECB probes the financial health of the region’s lenders.

Even though Bank of Ireland will probably not need new capital as a result of the Balance Sheet Assessment or the EU-wide stress tests next year, it should raise €300m to shore up its capital position, according to Deutsche Bank.