The Government has started to give consideration to re-capitalising or even nationalising Anglo Irish Bank if the company's share price plummets towards dangerous new levels within the next 10 days.

However, in a boost for the government, French banking giant BNP Paribas is eyeing up Irish banks, with EBS its chief target.

The government's preference is to put together a multi-billion euro re-capitalisation package for the six main institutions next year, but the recent near collapse in the stock price of Anglo Irish Bank has put the government on alert to move earlier if necessary.

Department of Finance officials are not keen on shoring up any bank under emergency conditions, but their hand may yet be forced.

At one point last week the Anglo Irish share price touched 28 cent a share and the bank was worth less than €300m. Only last year the shares were trading at over €12 a share.

The government can not, and will not, let the bank fail as this would involve a huge payout, possibly amounting to over €40 billion to bondholders and other creditors, under the government guarantee scheme.

Government officials were relatively relaxed about the Anglo share price last week but expressed concern that further severe declines in the price have the potential to prompt corporate depositors to take their money elsewhere, even though deposits are covered by a government guarantee scheme, but they stressed this had not happened to date. Anglo declined to comment.

Senior government figures tended to play down intense speculation about an early move by the state, but they acknowledged that "if things continued [as they were last week]" that would change.

Meanwhile, BNP Paribas, the largest bank in France, is expected use its Irish joint venture Postbank to make an acquisition in the Irish market, with EBS Building Society the chief target.

Although Anglo's share price has plummeted, this didn't stop the bank hosting a Christmas party for hundreds of its staff at Dublin's Mansion house on Friday night.

This was billed by the company as a "thank you" for all of their "untiring efforts" during the year and definitely not a "lavish affair".

However, there was tight security around the event, access to which was via pre-assigned wristbands only.

There was no way in to the venue on Friday evening when this newspaper att­empted to gain entry without a wristband.

A member of security staff said it was closed for a private event. When asked what the event was, we were told the name of another company other than Anglo.

Similarly, none of the partygoers making their way into the event were willing to say that it was for Anglo Irish Bank, with several stating the names of other financial institutions or that they simply "did not know" who the event was for.

A spokeswoman for the bank declined to comment when asked if Anglo had considered cancelling the event in light of its recent difficulties and would not say how much the event was costing and how many people were present.

However, she did not deny that the event included free food and drink.

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