IMF says Irish bank losses could total 35 bln euros

WASHINGTON, June 24 (Reuters) - The International Monetary Fund on Wednesday estimated that Ireland's bank losses could total 35 billion euros by the end of next year and called for decisive efforts to repair the country's financial sector.

In its annual review of Ireland's economy, IMF staff said the agency created by Irish authorities to deal with bad bank loans should be given the scope to address all classes of toxic bank debt, suggesting it should not be restricted to only commercial property loans.

Ireland is creating a National Asset Management Agency (NAMA) to deal with housing bad debts to free up the flow of credit in its banking sector.

The IMF said the bank losses are likely to extend beyond the property development sector as the economy weakens and the design of the agency should address that possibility.

"NAMA should be given the legal and operational flexibility to address all classes of distressed bank assets," the IMF said.

The IMF also said that a number of its directors "considered that, for bank restructuring, other options including a greater equity interest by the government should not be ruled out." (Reporting by Lesley Wroughton; Editing by editing by Leslie Adler)