Irish banks cut to junk status

18 April 2011

Long-term deposits at Irish banks have been downgraded two notches to junk status by ratings agency Moodys.

The move comes after the company cut Ireland's sovereign debt rating last week.

It means the Bank of Ireland is now rated at Ba1, with Irish Life and Permanent, EBS and Allied Irish Banks all reduced to Ba2.

The agency noted the outlook on the long-term bank deposit and unguaranteed senior unsecured debt ratings for these institutions is now negative, adding there is much uncertainty as to whether the government would provide further support to the banking sector should such assistance be required.

"Moody's is no longer incorporating any systemic support in the unguaranteed senior unsecured debt ratings of the domestic Irish banks," it explained.

Earlier in the month, Allied Irish Banks reported a loss totalling €10.4 billion ($15 billion) in its annual results, with such reductions having quadrupled in 2010 following a charge of €6 billion.

By Gary Cooper

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