IBRC has still to show it can run down business 'in predictable manner' - S&P


THE FORMER Anglo Irish Bank still has to show that it can run down the bank’s business “in a predictable manner” over a planned period of up to 10 years, according to credit ratings agency Standard and Poor’s.

Irish Bank Resolution Corporation (IBRC), as it is now called, is also running down the former Irish Nationwide Building Society. It has become “a more stable institution” following “the plethora of compulsory changes” since the bank’s nationalisation in 2009, the ratings agency said.

The bank had its rating raised to B- from CCC+ and it was put on a stable outlook as S&P said any deterioration in the bank’s capital could be managed.

“We consider that IBRC still has a way to go to demonstrate that its run-off will be completed in a predictable manner,” the agency said.

The bank has less than €150 million of senior unsecured unguaranteed debt left after repaying about €1.5 billion of this debt in June.

“We believe that the likelihood of the Irish Government introducing burden sharing on senior unguaranteed and unsecured bondholders has passed,” said S&P.

The vast majority of the bank’s remaining liabilities relate to borrowings from the Irish Central Bank, the agency said, as it revised the bank’s link to the Government to “strong” from “limited”.

“We assume that IBRC will continue to generate adequate pre-provision operating income and that, while loan impairment charges and related non-recurring expenses may remain elevated, the impact on its capital position will remain manageable,” said S&P.

The agency would raise the bank’s rating if the deleveraging of its loans and operating performance gave it “confidence that the wind-down of its operations will progress in a predictable manner”.

The bank was able to report a profit before provisions for bad loans for 2011, unlike most of its Irish peers, because of the interest income on the promissory notes issued by the last government to cover €31 billion of the €34.7 billion bailout cost of Anglo and Irish Nationwide through instalments.

State-owned IBRC is scheduled to publish its results for the first half of this year on Friday.