S&P lowers bank credit ratings

Ratings agency Standard & Poor's said today it had downgraded Anglo Irish Bank's long-term counterparty credit rating.

The agency lowered Anglo Irish Bank's rating by six notches to B, or junk, and also lowered the long-term counterparty credit rating AIB, Bank of Ireland, and Irish Life and Permanent by one level.

"In our opinion, the stand-alone creditworthiness of the four domestically owned Irish banks has weakened," S&P said today. "we believe that the Irish Government may be forced to reconsider its current supportive stance toward Anglo's unguaranteed debt."

S&P also cut ratings on the senior and subordinated debt of the banks.

The downgrade also affected some foreign owned banks. Barclays Bank Ireland was lowered by one notch and placed the ratings on for the bank on CreditWatch with negative implications, along with the ratings on Ulster Bank Ireland, its UK parent, and KBC Bank Ireland.

“The rating actions follow a turbulent period for the Irish banking system, which in our view has led to the fortunes of the Irish sovereign becoming increasingly intertwined with those of its banking system,” S&P said.

Shares in Irish banks were mixed on the Irish market today, with AIB up 6.7 per cent to 32 cent and Bank of Ireland making modest gains to 25.8 cent by 2.10pm. Irish Life and Permanent was down 16.2 per cent to 50 cent.