EDITOR'S TAKE: The bond crisis is another blow, but the old problems still remain for Ireland's banks

Ireland is on the precipice of a fresh crisis at a point when it still has significant old fires to fight, not least in its battered financial services sector.

The bond crisis shows signs of snowballing - this morning the yields on Irish bonds has surged to more than 7.4% on the back of concerns over an upcoming by-election, which could add to political instability, and a new Franco-German push over sovereign bailout costs.

This is bad. As the Telegraph's Ambrose Evans-Pritchard points out today, such a crisis of confidence could contaminate everything and there's a "reasonably high probability" (according to UCD's professor Karl Whelan) that Ireland could turn to the EU-IMF for funding, or that the government could impose draconian cuts of up to €7bn.

At some point the public's weary finger will once again be pointed towards the country's banking sector, which kick-started the near-apocalyptic scenario Ireland is now dealing with.

The high cost of borrowing to Ireland's banks has the potential to cause further problems, but, as news this week shows, the same old issues remain.

AIB's decision to pull its UK business out of the shop window (due to a lack of decent bids) has again raised the spectre of further government ownership - this time of up to 95% - and raises the question of whether job cuts will have to occur closer to home.

The sale would have lifted out 1,300 employees, which is obviously a significant saving for the bank. Subsequent comments from David Hodgkinson, the bank's new executive chairman brought in to fight the crisis, that it would be "somewhat slimmer" will have added a further layer of sweat to AIB staff's already slippery hands.

Bank of Ireland, meanwhile, has also just unveiled the first stage of its efficiency plan that will eventually see to the loss of 750 jobs with a move to cut 270 positions in Northern Ireland and mainland Britain.

Ireland clearly needs some positive sentiment. Step forward IDA Ireland, which has this week been pointing to how international firms are deepening their roots in the country.

To an extent this is true in the financial sector, with job numbers in the IFSC remaining relatively stable despite the crisis engulfing the domestic banks.

Still, international banks continue to be troubled by their Irish operations and are firmly in retreat. National Irish Bank this week said that it commercial property loan losses stand at €1bn, and parent company Danske Bank said its Irish division was the "most problematic". It's reducing the number of branches here by more than half.

Similarly, Lloyds Banking Group's chief executive Eric Daniels pointed to the how the "well documented" problems in Ireland continue to impact the valuation of its property portfolios. It's no surprise that the already beleaguered bank is therefore retreating from Ireland.

The new bond crisis is another problem for Ireland to deal with, but the old battles for the country's banks still continue.