Minister for Finance Michael Noonan has insisted there is "no evidence" to suggest stress tests on Ireland's banks will lead to a requirement for yet more capital.

Saying confidence in Irish banks is beginning to return, the Minister said the banks’ reliance on special funding from the Eurosystem of central banks was now “a fraction” of the level at the outset of the rescue programme.

Separately, he said the raising of a total €1 billion by Permanent TSB and AIB was further evidence of "improved international investor sentiment" towards the two institutions and Ireland generally.

Allied Irish Banks Plc sold €500 million of three-year securities yesterday, its first senior unsecured benchmark bond since before the bailout programme three years ago.

Permanent TSB Group Holdings sold €500 million of mortgage-backed securities, the first such transaction since 2007 by any Irish bank.

At the same time, rebel Fine Gael TDs in the Reform Alliance said the decision to leave the bailout without a credit line posed risks to the Irish people that could and should be avoided.

In a Dáil debate on the bailout exit, Mr Noonan said Irish banks had strong capital ratios compared with the European average.

He went on to dispute the premise that taxpayers would be the first port of call in relation to any capital shortfall identified under the new stress tests.

“Access to capital markets be it debt or equity for banks is far better now than it has been for a number of years as evidenced by a number of recent significant transactions.

“Banks can also generate capital internally by becoming more efficient and becoming more profitable.”

In a statement the Reform Alliance TDs said there had been no substantive discussion on what the real cost of avoiding a credit line meant to taxpayers.

“The enormous cash reserves that we are holding are costing the taxpayer over €600 million a year when we could have accessed a credit line for €50 million a year,” they said.