Irish bank shares could come under selling pressure tomorrow as news of Liam Carroll's proposed examinership reverberates throughout the market. The Irish banking sector has for a long time dismissed the chances of a "domino effect'' – where a number of creditors push a major developer into examinership or liquidation – but now it appears to be a real danger.

For many years Irish banks have been building up dangerous loan concentrations in their lending books and that is why a Carroll examinership poses such dangers. Put simply, Irish banks have been making large advances to a relatively small circle of developers, thereby pooling more risk than is usually advisable.

The UK and US banking markets are unlikely to be significantly disturbed by the failure of just one developer, but the loan concentrations here are so narrow that an implosion of Carroll's various companies represents a real danger to bank balance sheets.

While Irish banks now have more capital to absorb losses than six months ago, there will be concern that if Nama is not established very soon, other developers could be vulnerable to aggressive legal pursuits by lenders, particularly those from foreign banks.

Irish-headquartered banks and the government were last week furious at the aggressive approach taken against Carroll companies by Dutch-owned lender ACC Bank, which many believe is poised to leave the Irish market.

ACC has refused to comment on its intentions and it is entitled to remain aloof from the potential losses for the likes of AIB, which may flow from the Carroll examinership process. ACC, owned by Rabobank, has been to the fore in taking cases against Carroll and fellow developer Paddy Kelly. (It's worth recalling however that Irish Nationwide has also secured a substantial judgement against a Carroll company, and it is covered under the government's guarantee scheme.)

A substantial number of Carroll companies are now set for examinership and whatever happens it seems likely that Irish banks will be forced to bear further losses on their loans as a result of what happened on Friday.

AIB is the most exposed, according to court proceedings on Friday, but the problems caused by a Carroll examinership are far wider than just loan losses for Ireland's largest bank. While AIB has a €440m exposure arising from Friday's proceedings, other Irish banks could also end up nursing substantial losses.

It is not clear whether the Irish banks, including AIB, have already made provisions for Carroll losses, but if they have not, the markets are likely to want to know whether his particular case is large enough to alter their overall estimates for bad debts. The idea of one developer causing those kind of ripples might seem strange, but Carroll is quite simply the largest developer operating in Ireland.

Not all his companies are going into examinership of course, just those where ACC is among the creditors, his legal representatives said on Friday. That means that the exposures of the banks overall are potentially huge, well in excess of €2bn according to Sunday Tribune sources.

From court proceeding on Friday it's clear that Carroll's companies have wilted under the legal pressure brought on them by ACC. This is a bank which has been saying since April it is reviewing its Irish operations.

Last year it put aside €294.9m for bad loans and another €78.2m for other expected losses, most of it related to "loans and advances to customers in the construction and real estate sectors". Rabobank had to invest €175m in the Irish operation to ensure it was adequately capitalised last year.

In May, observers got a sense of ACC's determination to secure repayment of its loans and interest. Justice Peter Kelly was told in May that, while developer Paddy Kelly was in Florida on business, solicitors for the bank had tried to serve legal proceedings on him directly at his home at Clonmore, Shrewsbury Road, Dublin. On 23 April, documents were eventually served on his housekeeper who confirmed Kelly lived there.

ACC has adopted a very aggressive write-down policy. Based on its 2008 figures it has written down approximately 7% of its €5.6bn loan book, mainly due to the property slump. This is at the hub of the Carroll case – foreign banks are prepared to prick the property developer bubble here and this may seriously dent Irish banks, who have been avoiding such action for a long time.