UPDATE 3-KBC takes hit as Irish bank pain mounts

* Makes net loan provisions of 263 million euros in Ireland

* Takes 150 million euros of net provision for KBC Lease UK

* Follows other banks to warn of Irish problems

* Shares down as much as 5.3 pct

(Recasts lead, adds analyst comment, background)

BRUSSELS, Jan 6 (Reuters) - Belgium's KBC on Thursday increased provisions for bad loans at its Irish unit, with analysts expecting more to come from the bank and peers exposed to Ireland.

KBC Ireland said at its third quarter results in November that it had a loan portfolio of 17.4 billion euros of which 75 percent were mortgages. At the same time, KBC Group reported an exposure of 500 million euros to Irish sovereign debt.

KBC said on Thursday it will take additional net provisions of up to 330 million euros ($433.7 million) for losses on Irish loans and for irregularities at KBC Lease UK.

Albert Ploegh, an analyst at ING who has a hold rating on KBC, said he was unsure whether the provisions were enough to draw a line under KBC's Irish problems.

"KBC has now put aside 300 million euros, my own stress test points to 1 billion euros. I've seen others mention 600 million. Today's announcement was inevitable, but I question whether it is enough. Doubts will remain in the market."

Shares of KBC fell as much as 5.3 percent in early session but recovered to trade 2 percent lower at 1410 GMT.

In Ireland, where KBC owns KBC Bank Ireland, the banking and insurance group said it will take total net provisions of 263 million euros ($346 million) for its commercial and residential mortgage lending portfolio in the fourth quarter, part of which it has already taken into account.

Britain's Lloyds last month warned it needed higher provisions on its Irish operations as more commercial real estate and home lones soured. [ID:nLDE6BG1DI].

Ireland agreed an 85 billion euros international rescue package in November, with much of it needed to recapitalise its banks.

In return for EU/IMF external aid, Ireland has pledged to radically shrink and restructure its banking sector to wean them off dependence on ECB funding and derisk their balance sheets.

Banks will try to sell some of their non-core assets but to avoid large write-downs, which would put pressure on already stretched balance sheets, they will also look at transferring assets, in particular risky loans, to a state-run "bad bank" originally set up to take on their commercial property portfolios. [ID:nLDE70505J]

The restructuring plans will be unveiled at the end of this quarter.

In the UK, KBC said it discovered irregularities during internal audits in some contracts with third parties at its lease business, for which it will take a net provision of about 150 million euros.

KBC says it expects its underlying results from other units for the fourth quarter to be in line with its expectations. (Reporting by Robert-Jan Bartunek in Brussels, Additional reporting by Carmel Crimmins in Dublin; Editing by David Cowell) ($1=.7609 euros)