Fitch lowers ratings on Irish banks
European Investment Bank to provide €200m for Irish SMEs with AIB
Credit ratings agency Fitch has said it will take several years before Ireland returns to an A status. It has also downgraded the debt of five of the country’s banks, including AIB and Bank of Ireland.
Long-term and short-term issuer default ratings (IDRs) for AIB and Bank of Ireland have been downgraded to BBB from A- and F2 from F1.
This move follows yesterday’s downgrade of the Irish sovereign.
The guaranteed debt of AIB, Bank of Ireland, Anglo, EBS and Irish Nationwide has also been reduced to BBB+ from A+.
All of the bank’s individual ratings were also downgraded because of the new capital requirements announced recently by the Central Bank. Fitch says the decision was also affected by “intensified funding pressures”.
Most of the downgrades pertaining to the banks are a result of the agency’s belief that the level of support that the sovereign can provide to its banks has “diminished”.
The agency put a ‘negative watch’ on EBS because it said it is “unlikely” the building society will be acquired by a higher-rated entity.
Meanwhile, Fitch said it would take several years before Ireland could return to an A status.
It recognised the relative stability the country received as a result of the EU-IMF bailout package but is still concerned about the fiscal costs of restructuring and supporting its banks.
Ireland is still higher than the BBB- rating – one step above junk status – that Fitch gave bailed-out euro zone member Greece earlier this year.