By Eamon Quinn

DUBLIN--The Irish government will get tough with banks that fail to deal with the country's large number of problem home loans, Irish Finance Minister Michael Noonan said Wednesday, in a sign of its growing impatience that lenders are taking too long to come to terms with the country's worst ever debt crisis.

Mr. Noonan told a media briefing that the Irish central bank could impose sanctions on banks that fail to strike deals with distressed borrowers, but said he anticipated that the banks would comply.

A huge property and banking crisis brought Ireland close to bankruptcy, and the country required an international bailout in late 2010. Irish taxpayers pumped huge amounts--amounting to 40% of the country's annual economic output--to recapitalize Irish lenders. As unemployment soared, many households faced difficulties in meeting their monthly mortgage repayments. Despite the banks receiving large sums, the country's home-loan debt crisis remains one of the worst in Europe.

Irish central bank figures published last week showed that 94,488 principal residential mortgages, or almost 12% of all such loans by number in the Irish republic, were in arrears for more than 90 days at the end of December 2012.

A further 42,031, or 5.3% of home loans, were not in arrears, but had nonetheless been restructured, suggesting a very large number of borrowers had faced some sort of difficulty in meeting the original terms of their mortgage loan agreements. Separately, 28,421 residential buy-to-let properties, or about 19% of all such loans, were also in arrears at the end of December.

"The government acknowledges that the mortgage arrears situation is one of the most serious social and economic issues facing the country," Mr. Noonan said. "It is a cause of distress to many families. It is also an impediment to economic recovery."

He said that Ireland's banks have been recapitalized to very high levels, and have enough capital to work through their bad home loans.

The Irish central bank said it will force lenders, including Allied Irish Banks PLC, Bank of Ireland PLC and Permanent TSB, which received large amounts of Irish taxpayer aid, to review all their residential home loans. And it will impose sanctions on lenders in 2014 that continue to fail to strike deals on loans the central bank believes are "unsustainable".

Ulster Bank Ltd., the Irish unit of RBS PLC; ACC Bank PLC, a unit of Rabobank; and KBC Bank Ireland PLC will face the same "prudential" targets.

The authorities aim to ensure lenders no longer keep "kicking the can down the road" and to ensure "new sustainable solutions" for borrowers, Matthew Elderfield, a deputy governor of the central bank, said at the briefing.

Write to Eamon Quinn at eamon.quinn@dowjones.com