US hedge fund Millennium International Management has raised its bet against Bank of Ireland's shares.
It comes as Davy says 2020 will be a write-off for banks, with losses across Irish lenders of €4bn.
Millennium now holds a short position in 1.41pc of the bank's shares, having lifted it from 0.91pc just over a week ago. The current short position is valued at just under €26.8m based on Bank of Ireland's €1.9bn market capitalisation.
Another US hedge fund giant, ExodusPoint Capital Management, has a 0.53pc short position in Bank of Ireland.
New York-based Millennium, which has $42bn (€39bn) of assets under management, first notified the Central Bank of a short in Bank of Ireland on April 29, when it held a position of 0.52pc.
When investors short a share, they are betting that its price will drop. They borrow a company's shares from other shareholders and can profit if the price falls by buying back the shares at a lower price to return them to their original owner. Short positions can turn sour if the share price in the target company rises.
Under European Union rules, short positions greater than 0.5pc of a listed company's stock must be publicly disclosed.
Shares in Bank of Ireland, whose chief executive is Francesca McDonagh, have risen since Millennium first revealed its short position in the group.
In the middle of this month, Bank of Ireland's market capitalisation was €1.45bn as its shares traded at about €1.30 each. Yesterday, its shares were changing hands at €1.76, or 35pc higher.
ExodusPoint first revealed that it had a short position in Bank of Ireland on May 18.
Davy Stockbrokers said yesterday that, despite the challenges facing Irish banks, they have entered the pandemic from "positions of capital, funding and liquidity strength".
However, Davy warned that the impact of the crisis should not be underestimated.
"The economic shock arising from the pandemic and the associated restrictions will not only see a spike in impairment charges but will also significantly impact income generation as both loan demand and activity levels fall," Davy said.
Earlier this month, Bank of Ireland reported an underlying loss of €255m for the first quarter of 2020. It recorded adverse movements on valuations and other items totalling €155m, and impairment charges of €266m.