Irish banks agreed on Monday to offer further breaks on a case by case basis and other forbearance options to homeowners and firms that require more help when initial payment holidays first offered in March expire.

However while the previous sector-wide scheme did not impact anyone's credit ratings, any further break or other arrangement will be reflected in borrowers' credit records, the Banking and Payments Federation Ireland said in a statement.

"Given the uncertain outlook, we cannot know for certain the number of borrowers that will not be able to return to full capital and interest after the payment breaks. But it is safe to assume that it will be material across all loan types and higher for SMEs," Sibley said in a speech published by the bank.

At their peak in June, Irish banks had put more than 220,000 payment holidays in place for mortgage holders, small and medium-sized businesses and larger firms.

One hundred and fifty thousand - accounting for 20 billion euros in lending - related to Irish borrowers, including nearly one in five of all SME loans.

A quarter of impacted borrowers were still on their first three-month break at the start of September, with 34% on their second and 41% - mostly mortgage and personal loans - no longer needing assistance, central bank data showed.

Sibley said different solutions will be required to support those unable to return to full repayments and that banks had already begun to move some to individually tailored supports.

He urged lenders to use all options but not to overly rely on further temporary forbearance in order to avoid a build-up of distressed debt in a country still dealing with soured mortgage loan the financial crisis a decade ago.

By Padraic Halpin