IRISH BANKS have €74.2 billion worth of Government-guaranteed senior debt and inter-bank loans maturing before the guarantee ends in September, Minister for Finance Brian Lenihan has said.

Senior debt accounts for €57.8 billion and inter-banking lending €16.4 billion of the outstanding total, Mr Lenihan said in response to a parliamentary question.

Irish financial institutions face heavy borrowing requirements during the remainder of the year to help repay debt maturing at the end of the State bank guarantee.

The banks can repay their debt using cash reserves they have built up and by using bonds issued by the National Asset Management Agency from the purchase of their development loans to draw cash from the European Central Bank.

The guaranteed financial institutions have also raised €19 billion so far this year under the extended guarantee, according to fixed-income broker Glas Securities.

The firm estimates the banks had to raise €35 billion this year, leaving a further €16 billion required with most of this expected to be borrowed under the extended bank guarantee before it expires later this year.

The banks face a challenging period trying to meet the borrowing shortfall by September as the bond markets have frozen due to the sovereign debt crisis and the summer period when the debt markets traditionally close in August.

The Department of Finance is seeking to push out the expiry of the guarantee to the end of the year, which would buy the institutions more time. This would match the end of the guarantee to the Financial Regulator’s deadline for meeting the new capital levels.

The department is awaiting European Commission approval to extend the guarantee.

The revised State bank guarantee, the Eligible Liabilities Guarantee (ELG) introduced by the Government late last year, allows the institutions to raise funding of up to five years in duration before expiry of the two-year blanket guarantee on September 29th.

Brussels extended approval for the ELG on a rolling basis until the end of this month, paving the way for an expected decision later this month for a six month extension until the end of the year.

Analysts at Royal Bank of Canada last year dubbed the massive level of debt maturing in September “the wall of worry”.

In a separate development, Allied Irish Banks said interest payments on some bonds due this month would not be paid due to a “dividend stopper” by the European Commission pending approval of its restructuring plan.

Bailed-out banks cannot pay dividends pending a review of their viability under state aid rules.

It emerged yesterday that French bank BNP Paribas has hired international corporate law firm Dewey LeBoeuf to investigate the possible purchase of AIB’s Polish bank, Bank Zachodni WBK.

BNP Paribas was cited as a favourite to purchase the Polish bank by French newspaper La Tribune. Other possible suitors include rival French bank Société Générale and Spanish banks Santander and BBVA, and a consortium of local companies assembled by the Polish government.

AIB is selling its overseas businesses in Poland, the US and the UK to raise some of the €7.4 billion required to meet the new capital rules set by the regulator.