Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Rating Action:

Moody's downgrades Irish bank ratings

Global Credit Research - 18 Apr 2011

No impact on stand-alone financial strength ratings

London, 18 April 2011 -- Moody's Investors Service has today downgraded the ratings of several Irish banks following Moody's rating action on the Irish government's bond ratings which have been downgraded by two notches to Baa3 with a negative outlook from Baa1. Today's bank rating actions are:

• Moody's has downgraded by two notches the long-term bank deposit ratings of Allied Irish Banks (Allied Irish), Bank of Ireland (BoI), EBS Building Society (EBS) and Irish Life & Permanent (IL&P), and that of ICS Building Society (ICS) by one notch. BoI and ICS are now rated Ba1. Allied Irish, EBS and IL&P are now rated Ba2. The short-term bank deposit rating at these five institutions has been downgraded to Not-Prime, from P-2 for BoI and from P-3 for the other four institutions.

• Moody's has downgraded by one notch the unguaranteed senior unsecured debt ratings of Allied Irish, EBS and IL&P to Ba3 and BoI to Ba2.

• The outlook on the long-term bank deposit and unguaranteed senior unsecured debt ratings of these institutions is negative, in line with the outlooks on the government rating and on the stand-alone ratings of the banks.

• This action concludes the review on these ratings initiated on February 11, 2011.

• Moody's has also downgraded to Baa3 the debt guaranteed under the Irish government's Eligible Liabilities Scheme. This refers to the government-backed senior debt of five institutions -- Allied Irish, Anglo Irish, BoI, EBS and IL&P.

RATINGS RATIONALE

The rating actions announced today are best understood as: (i) the reduction in the level of systemic support embedded in our deposit ratings following the downgrade of the sovereign rating; and (ii) the removal of systemic support from the unguaranteed senior unsecured debt ratings meaning that these are now placed at the same level as the stand-alone ratings of the banks.

RATIONALE FOR THE DOWNGRADE OF BANK DEPOSIT RATINGS

The bank deposit ratings of Allied Irish, BoI, EBS, ICS and IL&P have been downgraded following the two-notch downgrade of the Irish government bond rating. At Ba1/N-P (for BoI and ICS) and Ba2/N-P (for Allied Irish, EBS and IL&P) these ratings continue to incorporate one notch of rating uplift from the banks' stand-alone ratings, reflecting the explicit support received by the institutions and Moody's expectation that further support for the deposits would likely be forthcoming in the event of need. This is based on the supportive attitude of the Irish government towards depositors as witnessed recently by the transfer orders to sell the deposits of Anglo Irish Bank and Irish Nationwide Building Society to Allied Irish and IL&P. The Ba1 bank deposit rating of ICS is now at the same level as that of its parent BoI. This reflects that, given the high level of integration of ICS in BoI and Moody's view that a sale of the institution is now less certain, it is unlikely that the government would differentiate support between deposits at the two institutions.

RATIONALE FOR THE REMOVAL OF SYSTEMIC SUPPORT FROM THE UNGUARANTEED SENIOR UNSECURED DEBT RATINGS

The new Irish government has already committed to supporting the banking system in its capital requirements following the announcement of the PCAR stress tests (Prudential Capital Assessment Review) and the PLAR (Prudential Liquidity Assessment Review) restructuring and deleveraging process (see "Moody's comments on Irish Banks following announcement of new capital requirements; no impact on senior ratings", 1 April 2011). However, Moody's believes that there is a high level of uncertainty around whether the government would extend further support to the banking sector if required (beyond the EUR35 billion that has been committed to as part of the EU/IMF support package). As a result, Moody's is no longer incorporating any systemic support in the unguaranteed senior unsecured debt ratings of the domestic Irish banks and these are now placed at the same level as the stand-alone ratings of the banks. However the unguaranteed senior unsecured debt ratings are not positioned below the stand-alone ratings as we do not see any imminent risk of distressed exchanges or specific unguaranteed senior unsecured debt burden sharing legislation for the "going concern" banks. In the event that the risk for unguaranteed senior unsecured debt was to increase then the banks' unguaranteed senior unsecured debt ratings would likely face further multi-notch downgrades.

NO IMPACT ON STAND-ALONE BFSRs

There are no rating implications for the standalone bank financial strength ratings (BFSRs) of the banks because (i) the overall losses incorporated into the capital requirements for the four institutions are in line with those that Moody's has been using in its own scenario analysis (the overall three-year provision charge of EUR27.7 billion compares to Moody's expected losses of approximately EUR32 billion); and (ii) the four banks' standalone ratings -- D for BoI, mapping to Ba2 on the long-term scale and D- for AIB, EBS and IL&P, mapping to Ba3 -- already incorporate a significant recapitalisation of up to EUR35 billion in total made available under the EU/IMF support package.

Furthermore, the BFSRs continue to reflect: (i) the banks' significant short-term funding pressures which have led to the high reliance on external funding; and (ii) the uncertain operating environment meaning that asset quality and earnings are likely to remain extremely weak. In addition, Moody's considers that the deleveraging process could further exacerbate asset quality and earnings pressures.

No deadline has been provided by which the PCAR capital requirement must be raised and Moody's assumes that the capital will be injected in the near future. However, if the capital is not forthcoming for any reason, then the BFSRs would likely come under downward pressure.

A key factor in any future upward pressure on BFSRs will be whether the measures outlined in the PCAR and PLAR process can now begin to restore confidence in the Irish banking system. However, for the foreseeable future, Moody's expects that the banks will continue to face funding difficulties; therefore the ongoing liquidity support from the Eurosystem remains vital. Moody's considers that the announcement by the ECB that it will now accept all debt instruments backed by the Irish government as collateral against ECB loans as a credit positive for the banking sector.

ANGLO IRISH AND IRISH NATIONWIDE BUILDING SOCIETY

Neither Anglo Irish Bank Corporation (Anglo Irish) nor Irish Nationwide Building Society (INBS) were included in the PCAR and PLAR process (both banks are rated Caa1 on review for possible downgrade/Not-Prime for senior debt and bank deposits with BFSRs of E, mapping to Caa1 on the long term scale).

Moody's understands that a further assessment of the capital requirements for Anglo Irish and INBS will be completed in May and as a result, the Caa1 unguaranteed senior unsecured debt ratings and long-term bank deposit ratings remain on review for possible downgrade. Moody's aims to complete its review of these ratings shortly after this process is completed. The review continues to focus on the new government's stance towards senior creditors, and the remaining depositors of the two institutions, including the remaining deposits. If the risk increases that senior creditors will be forced to bear losses, the ratings would likely face further downgrades.

GOVERNMENT GUARANTEED DEBT

In line with the sovereign rating action, Moody's has downgraded to Baa3 (negative outlook) from Baa1 the government-backed senior debt of AIB, Anglo Irish, BoI, EBS and IL&P which have each issued public debt under the Eligible Liabilities Guarantee scheme (see "Moody's downgrades Ireland to Baa3 from Baa1; outlook remains negative", 15 April 2011). The assigned government-backed Baa3 ratings are based on the unconditional and irrevocable guarantee from the Irish government (see "Moody's to assign backed-Aa1/Prime-1 ratings to debt securities covered by the Irish government's new guarantee", 7 January 2010).

The principal methodologies used in this rating were Bank Financial Strength Ratings: Global Methodology published in February 2007, and Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology published in March 2007.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating.

The rating has been disclosed to the rated entity or its designated agents and issued with no amendment resulting from that disclosure.

Moody's Investors Service may have provided Ancillary or Other Permissible Service(s) to the rated entity or its related third parties within the three years preceding the Credit Rating Action. Please see the ratings disclosure page www.moodys.com/disclosures on our website for further information.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

London
Ross Abercromby
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

London
Johannes Wassenberg
MD - Banking
Financial Institutions Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's downgrades Irish bank ratings
No Related Data.
© 2017 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be reckless and inappropriate for retail investors to use MOODY’S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or other professional adviser.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.