Bailing out the Anglo-Irish Bank could cost up to €34bn, according to the Irish central bank.
The central bank on Thursday announced that the bailout could cost €29.3bn in a "base" scenario and €34bn in a "stress scenario".
It also said that Allied Irish Bank needs to raise an additional €3bn by the end of the year.
The Irish finance minister Brian Lenihan has warned against letting Anglo Irish fail. He is reported to have told the Financial Times that due to the size of the bank relative to the annual national wealth, its failure could bring the country's economy down.
The BBC notes that despite Ireland taking tough measures to bring its economic situation under control, it continues to be viewed as one of the weakest economies in the eurozone.
The cost of bailing out the banks will contribute to Ireland's growing fiscal deficit. Taxpayer funds used to make capital injections into Irish banks are at around 30 per cent of the country's GDP.
Ireland's debt to GDP ratio is also poised to rise to nearly 99 per cent this year, the BBC added.