Merrill Lynch advised the Irish government that just 16.4 billion euro ($22.6 billion) would be needed to rescue its banks from collapse in 2008, some 47.6 billion euros short of the 64 billion euros that Ireland ended up paying to save the banks.
The estimate was revealed after a Merrill Lynch report from November 2008 was released by the Irish government last week following a freedom of information request from Pearse Doherty, from opposition party Sinn Fein.
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Merrill Lynch declined to comment on the report.
The Irish government paid Merrill Lynch 7.3 million euros over the course of 2008 and 2009 for advice on bailing out the banks.
Ireland also paid Rothschild 6.96 million euros for banking advisory services and forked out 6.29 million euro to Goldman Sachs for advice on capital raising exercises for four Irish institutions.
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A spokesperson for the Irish Department of Finance said the 7.3 million euro fee for advice related to "the multi-billion euro recapitalization of the banks, not just this Merrill Lynch report."
"The amount of capitalization depends on the level of impairment and the target Core Tier 1 ratio. We estimate the size can range from 6.5 billion – 16.4 billion," the report found.
Ireland spent 64 billion euros savings its banks. The state owns Allied Irish Bank and Permanent TSB, and currently has a 14 percent stake in Bank of Ireland, after the stake was trimmed from 36 percent following private investment.
—By CNBC's Jenny Cosgrave: Follow her on Twitter @jenny_cosgrave