The impact of new write downs caused the RBS's to slip by 5.7pc to 37.82p and the Lloyds shares closed at 66.5p.

Lloyds issued a statement that in Ireland the market conditions has further worsened and 10pc of its £26.7bn portfolio of Irish loans would be further vitiated by the end of the current year.

Lloyds said, "We are concerned that any economic recovery in the Republic of Ireland may take longer to achieve, and that asset prices will remain depressed for longer than previously anticipated."

The worsening of portfolio will further add £4.3bn and the total provisions will be covering 54 percent of the entire loan amount, thus indicating that Lloyds may not get back even half of its Irish loans.

The collapse of the Irish property market has caused the write-offs and 90 pc of the commercial property loans are polluted.

Lloyds quoted that austerity budget of Ireland and the political uncertainty of the country are the two main reasons for the disheartened outlook of its Irish portfolio.

Last month, Ireland has received the _85bn (£72bn) bailout package from the European Union and International Monetary Fund.

HBOS unit of Lloyds was one of the major real-estate players in Ireland.

Lloyds quoted that during last six months £2.7 billion in Irish loans have acidulated when £1. 6 billion have been termed as vitiated.