AIB and BoI ratings downgraded

HAVING already cut Ireland’s credit standing to BBB+ the rating agency Fitch has also lowered the ranking of some of the Irish banks.

Fitch confirmed yesterday it had cut AIB and Bank of Ireland’s ratings from A- to BBB. Fitch said its previous ranking reflected the support given to the banks by the state.

It decided to derate the banks further because it now believes the state’s ability to provide funding to the sector had diminished.

AIB and Bank of Ireland’s rating has been reduced from A- to BBB.

In a separate move Moody’s downgraded Bank of Ireland subordinated bond exchange that it had announced on Thursday.

The bank planned to exchange €1.5n of over €3bn of outstanding bonds from lenders at more favourable rates. The deal is expected to raise between €400m and €700m for the bank to be used to boost its share capital base.

The move follows a decision by the Financial Regulator to raise key ratios at the bank to 12%.

Fitch has left the ratings of Anglo Irish Bank and Irish Nationwide unchanged. They remain on “ratings watch negative,” however.

EBS needed about €1bn in fresh capital to boost its ratios. But Fitch said it now expects EBS is unlikely to be bought by an institution with a higher credit rating.

The building society has a number of suitors, including IL&P Life & Permanent and billionaire investor Wilbur Ross, who is part of the consortium led by Dublin-based Cardinal Capital Group. Ross said he was still optimistic about EBS and Ireland, despite fears of a further wave of mortgage losses and the debt crisis.

As fears about Ireland’s ability to meet its mounting debt crisis the International Monetary Fund decided to postpone consideration of a €22.5bn loan for Ireland agreed under the EU/IMf bailout.

In a statement issued from Washington the IMF said it took its decision to allow the Dáil time to discuss the wider joint IMF/European Union rescue plan.

Further evidence of Ireland’s debt pressures emerged form new Central Bank figures issued yesterday. They showed “other assets” rose to €44.7bn at end November from €34.6bn at end October.

Other assets include “exceptional liquidity assistance lending” for Irish banks, the Central Bank said.