Moody’s lowers Bank of Ireland ratings

International credit ratings agency Moody’s has downgraded Bank of Ireland’s senior debt and deposit ratings by one notch, from Ba2 to Ba3, on concerns that it may fail next year’s European bank stress tests.

Despite passing the Central Bank’s latest balance sheet assessment/ asset quality review earlier this month, the Central Bank increased its estimates for how much BoI might need for loan impairment provisions; despite the bank stating that a large proportion of the estimated extra €1.4bn has already been factored into its own calculations.

That assessment will form part of next year’s European Central Bank stress tests and Moody’s, yesterday, cited an increased risk to BoI bondholders, arising from “ongoing asset-quality challenges that have the potential to put pressure on BoI’s capital levels beyond the expectations of the Prudential Capital Assessment Review undertaken by the Irish regulator in 2011” for its decision.