The government faces having to raise billions of new funding, including bonds in sterling and dollars, on behalf of Anglo Irish Bank in the next year after the bank admitted it was finding it difficult to raise money in the capital markets due to "reputational damage".

It is increasingly likely that the government – already stretched by its own fiscal problems – will have to add to its own borrowings to lend directly to Anglo as debt investors and depositors shun the bank. Borrowings could include bond issues in dollars and sterling, market sources told the Sunday Tribune.

"There is real danger lurking there," one Dublin stock analyst said, after examining its annual report on Friday.

Anglo has €3.9bn in debt – as well as £460m and $229m in foreign currency bonds – due this year alone which it will have to redeem or refinance. The bank will also need to support its liquidity with deposits and other financial instruments to stay afloat.

But that is proving difficult. Deposits have been flat and funding terms and access have been generally very tight for the bank.

Anglo's annual report, published last Friday, states "the reputational damage to the bank resulting from a number of recent disclosures together with adverse ratings actions have significantly weakened the bank's competitive funding position" – despite the guarantee andnationalisation.

The government, however, has pledged "further support measures should they become necessary in the future".

The bank has €6.3bn in loan commitments – in addition to the €73bn already on the books – which will have to be supported from the balance sheet, too. More than a third of Anglo's business is in sterling while 14% is in dollars. This has to be funded in the respective currencies.

Meanwhile, Anglo is involved in a legal dispute in London with German bank WestLB over alleged misrepresentation in the sale of $55m of credit derivatives which the Irish bank bought in 2006.

Anglo says it bought the notes from WestLB institutional on the understanding that it would only hold the notes as a short-term investment and that the German bank would buy them back at par if they were not redeemed.

Anglo lost $43m when it redeemed early following a downturn in US property markets.