IRELAND’S GOVERNMENT BACKED banks are now officially junk following a downgrading of the long-term deposit ratings of the four surviving banks by the ratings agency Moody’s.

The decision to downgrade Bank of Ireland (BoI), Allied Irish Banks (AIB), EBS Building Society and Irish Life & Permanent (IL&P) follows the move to cut Ireland’s own ratings status to one level above junk status last week.

Moody’s reports that Bank of Ireland, the country’s largest lender, is now rated at Ba1 following the two notch cut which puts AIB, EBS and IL&P on Ba2, one notch below BoI.

The ratings agency said the rationale for the decision comes from last week’s downgrading of Ireland’s sovereign rating from Baa1 to Baa3 which is the lowest investment grade rating and just one notch off official junk status.

Moody’s said there is a high level of uncertainty about whether the Irish government would extend further support to the banking sector if required, beyond what has already been committed.

Neither Anglo Irish Bank nor Irish Nationwide Building Society were included in the latest ratings.

Both banks are rated much lower than the four main banks and stand at Caa1, meaning they are considered to have “a very high credit risk”. This status is on review for possible downgrade, according to Moody’s.

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This post previously appeared at TheJournal.ie >