Ireland’s central bank chief said on Thursday he expected Dublin to receive tens of billions of euros in loans from European partners and the IMF to shore up its shattered banks though the government said it had made no request yet.

Central Bank Governor Patrick Honohan was speaking shortly before a joint mission of the European Commission, the European Central Bank and the International Monetary Fund began talks at the central bank on a possible rescue package.

“The intention is and the expectation is, on their part and personally on my part, that negotiations or discussions will be effective and a loan will be made available and drawn down as necessary,” he told state broadcaster RTE.

“We’re talking about a very substantial loan for sure — tens of billions, yes,” Honohan said, acknowledging that there had been substantial outflows of funds from the Irish banking sector since April.

But Finance Minister Brian Lenihan played down expectations of an imminent bailout, saying Ireland was not yet at the point of taking a substantial international loan.

In a move to calm savers, he also said the government was extending an unlimited guarantee for depositors until the end of next year, six months longer than previously announced.

After 10 days of losses, European stock and bond markets and the euro rebounded on expectations Ireland would become the second euro zone country after Greece to receive a bailout to cope with high debts and deficits.

Dublin’s borrowing costs have gone through the roof since late October as concerns about the banks’ swelling liabilities and German-driven EU moves to create a system for restructuring stricken euro zone states’ debts unsettled investors.

Irish bond spreads over German Bunds narrowed on Thursday and the cost of insuring Irish, Portuguese and Greek debt against default fell as markets anticipated a likely rescue package for Dublin.

Spain found solid demand for 3.6 billion euros in 10- and 30-year bonds at an auction but had to pay a higher price than two months ago, as did fellow euro zone struggler Portugal, which sold treasury bills on Wednesday.

That helped dampen fears of contagion from Ireland to other highly-indebted euro zone members.

“The auction confirms there is still a good investment base for Spanish bonds,” said Jo Tomkins, an analyst at 4Cast.

The new chief executive of Italy’s biggest bank, Federico Ghizzoni of UniCredit, said he had “nightmares” over the euro zone debt crisis and was worried about Europe’s ability to address sovereign debt issues urgently.

“I am concerned about the fact that if not politically properly addressed, it will continue to be in the market, generating volatility,” Ghizzoni told reporters in Frankfurt in a rare public airing of fears shared by many senior bankers.

CORPORATE TAX TABOO

EU sources have told Reuters Ireland may need assistance of between 45 billion and 90 billion euros, depending on whether it needs help only for its banks or for public debt as well.

In an indication of potentially tough negotiations ahead, France said Ireland may have to raise its ultra-low 12.5 percent corporation tax rate — a taboo in Irish politics — in return for the assistance package.

French Finance Minister Christine Lagarde said Irish business taxation was abnormally low by European standards.

Higher-tax countries, including Britain, Germany and France, have long seen the Irish rate as a form of unfair competition.

But Irish Deputy Prime Minister Mary Coughlan told parliament the government would not be raising the corporate tax rate. “It’s non-negotiable,” she said.

Prime Minister Brian Cowen has repeatedly rejected suggestions that his government is discussing a bailout that would place public finances under EU-IMF supervision.

Lenihan is due to detail a four-year, 15 billion euros budget-cutting plan next week and the government will put a 2011 austerity budget to parliament on Dec. 7.

The Irish Times, voice of the country’s establishment, said in an editorial Ireland was facing political humiliation, 94 years after an uprising that led to independence from Britain.

“It may seem strange to some that The Irish Times would ask whether this is what the men of 1916 died for: a bailout from the German Chancellor with a few shillings of sympathy from the British chancellor on the side. There is the shame of it all,” the newspaper said.

Some analysts said Cowen has been playing for time, partly to avoid applying for aid before a key Nov. 25 by-election that could reduce his parliamentary majority to just two seats.

Euro zone sources said there was an agreement in principle to trigger aid when the joint mission completes its work — perhaps in days — and the aid would not be just for the banks.

Ireland has said the bill for cleaning up its banks could top 50 billion euros but investors fear the final figure could be even higher given rising residential mortgage arrears, deposit outflows and higher funding costs.

Allied Irish, whose shares have lost 70 percent of their value this year and which will be more than 90 percent owned by the state following a rights issue later this year, is due to issue a trading statement.

The country’s largest lender Bank of Ireland signalled last week that it had seen a 10 billion euros outflow of deposits from early August until the end of September.

Britain, whose banks have around $150 billion of exposure to Irish debt, has said it stands ready to help, and Lagarde said France expected London would provide bilateral loans in any package, given its close economic ties with Dublin.