An internal Department of Finance memo has warned that European attempts to get countries to share the risks and "burdens'' of major cross-border bank failures could pose dangers for Ireland, and particularly the IFSC.

The IFSC is host to a large number of the world's largest investment and retail banks. Many have back-office and fund-administration arms based in the IFSC.

The Sunday Tribune has seen a memo from the department concerning the influential de Larosiere report, which deals with reforming the EU's system of financial regulation.

The memo says while Ireland broadly supports most of its conclusions, getting countries to share the burden when banks fail could be a significant issue for Ireland as the European debate evolves.

"One issue for Ireland is the extent to which the new authorities impact on the home/host supervisory arrangements and any burden-sharing obligations which could arise in the event of the failure of a cross-border institution. This would be important for Ireland given the importance of our International Financial Services Centre (IFSC)'.'

The background note says Ireland has usually been opposed to pan-European regulators preferring instead that financial supervision remain at a local level. However the department is now accepting that recent financial crises have made this position unsustainable.

"The crises of the last 18 months or so have halted the landscape considerably and clearly demonstrated the cross-border impact of national failures in a globalised financial services industry,'' the note reads.