Losses of up to 100% could be imposed on some subordinated bondholders in Bank of Ireland.
The Department of Finance said the bailed-out lender still needs to raise 350 million euro by the end of this year to meet the financial target of 4.2 billion euro set by the Central Bank.
It revealed Finance Minister Michael Noonan is considering using powers available to him under the Credit Institutions (Stabilisation) Act to apply for a subordinated liabilities order (SLO). The legislation, passed last year, gives the minister wide-ranging powers to deal with the banks.
Mr Noonan has invited submissions from interested parties by the end of the month before making a decision.