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09/04/2009
Irish Banks Downgraded Despite Budget Proposal
Despite Brian Lenihan's best efforts, Ireland's banks have been downgraded by the credit rating agency, Moody's.
Moody's has cut its ratings on 12 banks operating in Ireland, despite the Finance Minister's budgetary plan to create an asset management agency to buy up risky bank loans.
The credit rating downgrade comes following AIB and Bank of Ireland both dropping over 30%, while Irish Life & Permanent has fallen by 21%.
In yesterday's budget, Brian Lenihan announced the plans for the new National Asset Management Agency, which would purchase the toxic debts from the banks at a significant discount to their €80-90bn book value by issuing Government bonds to banks.
However, Moody's said it had incorporated the expected losses on bank loan portfolios for some time and was concerned that the outlook for commercial property prices was poor and the likelihood of more corporate defaults was high.
Moody's is also concerned at the current erosion in residential loan performance, including the buy-to-let market, which makes up around 25% of the total market.
Ross Abercromby of Moody's said: "We believe that these losses are likely to significantly weaken the capital positions of most Irish banks and building societies over the next two years."
(DW/BMcc)
Moody's has cut its ratings on 12 banks operating in Ireland, despite the Finance Minister's budgetary plan to create an asset management agency to buy up risky bank loans.
The credit rating downgrade comes following AIB and Bank of Ireland both dropping over 30%, while Irish Life & Permanent has fallen by 21%.
In yesterday's budget, Brian Lenihan announced the plans for the new National Asset Management Agency, which would purchase the toxic debts from the banks at a significant discount to their €80-90bn book value by issuing Government bonds to banks.
However, Moody's said it had incorporated the expected losses on bank loan portfolios for some time and was concerned that the outlook for commercial property prices was poor and the likelihood of more corporate defaults was high.
Moody's is also concerned at the current erosion in residential loan performance, including the buy-to-let market, which makes up around 25% of the total market.
Ross Abercromby of Moody's said: "We believe that these losses are likely to significantly weaken the capital positions of most Irish banks and building societies over the next two years."
(DW/BMcc)
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