The major financial institutions do not expect any immediate surge in bad debts from the farming sector as a result of foot-and-mouth disease and are more concerned about the long-term effect on the tourism industry.

Speaking at an NCB Stockbrokers' equity conference yesterday, AIB group finance director, Mr Gary Kennedy, said if events continued to be cancelled, the tourism and leisure sector could bear the brunt of financial losses.

Lending to the farming and agri-business sector at AIB is less than 3 per cent or around €454 million (£358 million) of its €15.1 billion loans in the Republic, Northern Ireland and Britain. "Tourism is more worrying. If they remain closed for business for a long period, this could have a more dramatic impact on the economy," he said.

Anglo Irish Bank's chief executive, Mr Sean FitzPatrick, expressed a similar concern. The specialist small-business bank does not have any exposure to the farming sector but 13 per cent of its loan book is to the food sector, 2 per cent of which is to beef processing companies. Mr FitzPatrick said the bank was well covered for any potential losses in this regard with guarantees linked to the export refund scheme.

Anglo is active in lending to the tourism and leisure sector and would be concerned if it was adversely affected for any length of time. "We believe the foot-and-mouth restrictions is a temporary issue and are not overly concerned," Mr FitzPatrick said.

The banks have pledged to be sympathetic and supportive to farmers who may find themselves in financial difficulties because of the disease.

Irish farmers do not have huge bank debts relative to those in Britain. Any problems in meeting loan repayments will be dealt with at a local level. Problems may be alleviated by the rescheduling of loan repayments and overdraft extensions.