Bank shares slump after credit-rating downgrade

Shares in the three Irish banks listed on the Stock Exchange have taken a significant hit this morning following a decision by Moody's to downgrade their credit ratings.

AIB shares were down just under 30% at 11am, shedding 38c to 0.90, while Bank of Ireland shares had lost 25% of their value, dpwm 24c to 0.72.

Irish Life and Permanent was down 10c to 1.55, a drop of almost 5%..

Moody's says it decided to downgrade credit ratings for 12 banks operating in Ireland because of the continuing deterioration in real estate prices, the likelihood of more corporate defaults and the erosion in residential loan performance.

The banking losses pulled the overall index down by 38.56 points to 2,234.63.

Elsewhere, Tullow Oil was up 41c to 8.790, Elan Corp advanced 18c to 4.28 and CRH rose 10c to 16.10.

On the fallers' board, Paddy Power dropped 28c to 12.77 and Smurfit Kappa slipped 12c to 1.39.