Credit ratings cut on 12 Irish banks

by Gill Montia

Story link: Credit ratings cut on 12 Irish banks

Moody’s has downgraded the credit ratings of 12 Irish banks.

The troubled Allied Irish Bank and Bank of Ireland (which is behind the UK’s Post Office savings schemes) are among those to have been reassessed.

Both have had their Bank Financial Strength Rating downgraded to “D with a developing outlook”, from “C negative outlook”.

According to Moody’s, all the banks involved face further losses on property loans and investments plus rising defaults on their commercial loans.

The firm’s analyst, Ross Abercromby, explains: “We believe that these losses are likely to significantly weaken the capital positions of most Irish banks and building societies over the next two years.”

Yesterday, the Government of the Republic announced an emergency budget, the second in six months.

The Irish economy is expected to contract by 7.7% this year but ministers in Dublin are shunning the quantitative easing approach taken to deal with the recession in the UK, and have chosen to cut benefits and public spending and raise taxes.

Today’s rating cuts for the banks follow a decision last month by Standard & Poor’s to lower Ireland’s sovereign credit rating and place the Republic on “negative watch”.