Moody’s concerned about banks’ future

BANKS continued their bad run on the markets yesterday as a top ratings agency expressed concerns about their future.

As Ireland’s ISEQ Index fell just over 2%, AIB saw its share price fall 4.5% to €1.25 and Bank of Ireland dropped 4.7% to €1.42. Irish Life and Permanent was down 5.7% to €2.45.

Moody’s Investors Service said Europe’s fiscal crisis could threaten banks in Ireland, Portugal, Spain, Italy and Britain as the risk of contagion grows.

“Overall, Moody’s notes that each of these countries’ banking systems faces different challenges of different magnitudes, but warns that contagion risk could dilute these differences and impose very real, common threats on all of them,” the ratings agency said.

Bloxham economist Alan McQuaid said, as things stand, Europe may be months, maybe weeks away from an expanded debt crisis that cuts more countries off from access to the markets and forces fresh emergency action by rich governments or indeed the European Central Bank.

Aer Lingus shares jumped 2.6% to 70 cent while Ryanair fell 1.3% to €3.50.

In Britain stocks declined for a fourth day, extending this month’s drop for the benchmark FTSE 100 Index, amid concern sovereign debt in Europe will hamper economic recovery.

In Europe stocks fell for a third day, sending the Stoxx Europe 600 Index to a two-month low, on continuing concern the region’s debt crisis will spread.

“The threat that contagion might eventually morph into panic and spiral out of control is very real, and the reaction of eurozone policymakers remains dangerously counterproductive,” said Marco Annunziata, chief economist at Unicredit Group.

National benchmark indexes fell in 17 of the 18 Western European markets. Germany’s DAX fell 0.8% even as a report showed the nation’s factory orders surged more than economists forecast in March. Italy’s FTSEMIB slumped 4.3%.