UPDATE 2-Bank of Ireland eyes more state help

* "Bad bank" impact could lead to further state bailout

* Failure to launch bad bank would hit funding

* Sees impairment of 6.9 bln euros until March 2011

* H1 underlying loss of 979 mln euros; op profit pleases mkt

* Shares up 8 pct after deep falls since early Oct

(Adds market reaction)

DUBLIN, Nov 4 (Reuters) - Bank of Ireland (Dublin: BIR.IR - news) warned it might need another state bailout and that the 54-billion euro "bad bank" scheme was still not clear enough, though it soothed some market worries with its operating performance.

Shares in Ireland's biggest bank by assets and market value and rival Allied Irish Banks (Dublin: AIB.IR - news) have slid on concerns that delays in the launch of the National Asset Management Agency (NAMA) would set back attempts to raise capital privately as lenders in the United Kingdom are already tapping the market for capital.

"While the group's strong preference would be to raise capital from private sources ... ultimately it may be required to seek capital from the Irish government," Bank of Ireland said on Wednesday.

The warning comes just one day after Britian's two largest retail banks -- Royal Bank of Scotland (LSE: RBS.L - news) (RBS) and Lloyds Banking Group -- secured another 31 billion pounds ($51.06 billion) from the government, and agreed to sell branches and key businesses. [ID:nL3540088]

Bank of Ireland, which has received 3.5 billion euros of capital from the state in return for a 25 percent indirect stake, said the discount NAMA will apply to the loans transferred remained uncertain, adding that a complete failure to launch the scheme would hit its funding.

The bank, which said in September it was confident it could raise capital privately after transferring up to 16 billion euros of loans into NAMA, was cautious on that point on Wednesday, saying there was uncertainty about the amount and pricing of loans going into the bad bank.

Bank of Ireland now expects a loan impairment charge of about 6.9 billion euros until the end of March 2011, including 1.4 billion already taken in the year to March 2009 and another 1.8 billion in the half year to September 2009.

The impairment forecast, which is subject to significant change due to the NAMA process, was in line with latest expectations after a trading update in September.

"Bank of Ireland gives no indication whether it believes the impairment trend is continuing to deteriorate or whether there are signs that it may be stabilising as per Lloyds and RBS," said analysts at brokerage Davy.

RIGHTS ISSUE DELAY

Bank of Ireland posted a pretax profit of 80 million euros for the first half. However, without including a gain from repurchasing core Tier 1 debt, it had an underlying loss before tax of 979 million euros, or 96.6 cents per share.

In one indication of what life might look like after NAMA cleanses lenders of their bad loans, Bank of Ireland's operating profit before impairment charges rose to 1.85 billion euros from 1 billion a year earlier, though it was almost entirely wiped out by a 1.79 billion euro impairment charge.

"Operating profits have proven more resilient than expected," Davy said.

The operating performance and the lack of any further substantial bad news after several earlier downgrades to forecasts helped the bank's shares gain 12 percent to 1.58 euros by 0930 GMT, still well below the 3.5 euros reached in early October and a peak of 18 euros in early 2007.

Markets earlier expected Bank of Ireland to launch a rights issue this year but since uncertainties over NAMA are not expected to be cleared up until after its launch, sometime after the middle of this month, analysts now expect Bank of Ireland's rights issue to be delayed until 2010. ($1=.6782 euros) (Additional reporting by Antonella Ciancio; editing by Greg Mahlich and Karen Foster)