Customer account deposits at Allied Irish Banks have plunged 13 billion euros ($17.8 billion) since January, the lender said Friday, as the government held EU/IMF bailout talks on Ireland's debt.
"Customer accounts have been affected by current adverse international sentiment towards the Irish sovereign and banking sector and are down by circa 13 billion euros from the beginning of 2010 to the close of business on 16 November," AIB said in a trading update.
The bank, which is partly owned by the state after a huge bailout, warned that economic conditions remained challenging amid the government's brutal austerity measures that are aimed at slashing a huge deficit.
Allied also hiked its planned offer of new shares to raise 6.6 billion euros from an initial 5.4 billion euros, after deciding to scrap the sale of its British division.
"In view of our decision to halt the current sales process of AIB Group (UK) Plc, AIB intends to increase the size of its planned capital raising from 5.4 billion euros to 6.6 billion," it said.
The statement came as the indebted Ireland appeared set for a bailout package -- the second such eurozone rescue so far this year after Greece was helped in May.
Irish officials and EU/IMF experts began talks on Friday over a bailout for the former Celtic Tiger nation, whose public finances were ravaged by costly banking-sector rescues, a property market meltdown and the recession.
AIB admitted on Friday that the crucial bailout talks would be vital for investor sentiment towards the group.
"We note discussions that may impact the banking sector are ongoing between the Irish government, the EU and other institutions," it said.
"The outcome of these discussions is expected to be important in determining market sentiment and conditions.
"Should decisions or actions be agreed that affect AIB and are disclosed to us, we will update the market at that time."
The mission from the European Union, the European Central Bank and the International Monetary Fund will subject Ireland's books to forensic analysis and could report back as soon as Monday.
Crisis-hit Allied Irish Banks has been ordered by the government to raise a total of 10.4 billion euros in fresh cash.
To this end, it agreed last month to raise around 1.5 billion euros ($2.0 billion) from the sale of its 22.4-per cent stake in US group M&T Bank Corp.
Allied Irish Banks has also raised about 2.5 billion euros via the sale of its holding in Polish group Bank Zachodni to Santander of Spain.
Customer deposits accounted for 50 per cent of the bank's overall funding at the end of September and comprised its largest source of income, according to AIB.