AIB’s British operations score highly

FITCH Ratings yesterday gave AIB’s British-based and Channel Islands operations Individual “B” ratings in line with the parent bank’s, despite the fact that it is facing tougher trading conditions and rising bad debts.

Fitch said AIB’s own rating “reflects its sound profitability, good asset quality, limited market risk, and acceptable capitalisation”.

In that context it said AIB Group (UK) and AIB Bank (CI) were “so fully integrated into their parent bank’s strategy, that the ratings reflect the “B” individual rating of the parent bank”.

In a separate report, ratings agency Standard & Poor’s warned 2009 would pose many questions for banks including Ireland’s.

It said wholesale banking will be the issue that determines individual banking performances in the period ahead.

In particular, the agency said the continuing fallout from the US housing markets would continue to affect results across a wide range of banks.

“We expect to see the greatest economic adjustments in the UK, Spain, and Ireland, although there is a widespread pattern of weaker economic activity driving slower revenues,” it said.

“We do not expect to see significant increases in loan loss provisions for the first half of 2008, but we expect to notice early signs of rising delinquencies, tighter underwriting, slower loan growth, and increased resources in credit units — and therefore the expectation of higher impairments,” said the report.