Moody’s downgrades credit rating for Irish banks

The ratings agency Moody's has downgraded its credit ratings for 12 banks operating in Ireland, despite the Government's plan to create an asset management agency to buy up risky loans.

Moody's says it made the decision because of the continuing deterioration in real estate prices, the likelihood of more corporate defaults and the erosion in residential loan performance.

In yesterday's Budget, Finance Minister Brian Lenihan said a new agency would be established to purchase bad loans from Irish banks at a significant discount in an effort to free up credit in the banking system.

The banks affected by the Moody's downgrading are AIB, Bank of Ireland, ICS Building Society, EBS Building Society, Irish Life and Permanent, Ulster Bank Ltd, Ulster Bank Ireland, First Active, Bank of Scotland (Ireland), KBC Bank, Irish Nationwide Building Society and Zurich Bank.