The full extent of the problems, caused by margin pressure because of oversupply in the hotel trade, will be revealed in FBD's results in March.

The bad news comes less than a year after FBD acquired full control of the Tower Hotels Group after buying out the minority 25% stake owned by Con Horgan, founder of Abbey Travel.

The transaction left the Tower Group with five properties including four-star Faithlegg House in Waterford.

Earnings have been under pressure for some time. Pretax profits at FBD's property and leisure division, which includes Spanish properties as well as the Tower hotels, slipped to 14.5m in 2004 from 15.8m a year earlier.

The difficulties continued into the first half of 2005 with FBD reporting "challenging times" at its hotels in Spain as well as Ireland due to oversupply.