Moody's Investors Service has said it is maintaining its existing rating for Allied Irish Banks (AIB) following the bank's announcement of a strategic alliance with Keppel TatLee Bank, Singapore's fifth largest bank.
The US credit rating agency, Standard and Poor's, has warned that it may downgrade its ratings on AIB. It has placed its long-term ratings on the bank and its long and short-term ratings on AIB's related companies on creditwatch with negative implications. Its short-term ratings on AIB and Allied Irish Banks NA Inc are unchanged.
Moody's commented that the initial investment by AIB in Keppel TatLee Bank is not materially significant and that the announced step of its expansion in the Singapore market is a cautious one, as opposed to an outright acquisition.
"As a consequence, risks appear materially limited." However Moody's expressed some caution about the longer-term ramifications of AIB's international diversification strategy for the banking group's overall credit strength and risk-return profile.
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