Dublin brokers have been contacting their clients in the past week advising them to sell out of subordinated debt issued by Irish banks at substantial losses to avoid being wiped out in the event of further nationalisations.

Dolmen Securities last week told clients to sell an AIB lower tier 2 bond at half of face value, as investors were only likely to recoup a maximum of 20c in the euro if AIB is fully nationalised and bondholders are forced to absorb losses.

Subordinated bondholders rank just above shareholders in the capital structure, meaning they take losses after equity is exhausted. Dolmen had been recommending the bond, which paid a hefty 12.5% coupon, for months. It told investors the security offered high yields but carried only sovereign risk – considered until the last couple of months to be safer than bank risk. The news came as it emerged Anglo's subordinated bondholders had approved an offer to buy back those securities at just 20c on the euro. The offer had been extended as a means to recoup some of Anglo's expected €34bn in losses.

Although some investors had threatened to sue over the proposal, a majority backed the measure, fearing they could lose yet more money if they were outvoted. Anglo structured the offer in such a way that 'no' voters would lose virtually the entire value of their bonds if they failed to vote with a majority.