THE taxpayer could be liable for more funds for the banks unless they can get rid of tracker mortgages or raise private funds.
The analysis by Standard & Poor's (S&P) says the Government and the banks could be locked in a financial marriage for several years.
However, the ratings agency said things could improve if the EU's European Stability Mechanism were to buy the Government's stakes in the banks, or if they were sold to foreign investors, which could bring general government debt below 100pc of GDP.
S&P said that any deal which would see EU leaders break the damaging connection between bank losses and government debt would see the credit rating outlook for Ireland change from "negative" to "stable".
"Of perhaps greater significance for many Irish banks, in our opinion, is the possibility that the Government may be able to engineer the transfer of uneconomic tracker residential mortgages from their balances," it said.