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CRAs to downgrade Irish banks after Budget

Thursday 25 November 2010 - by Nicola York

Two credit rating agencies have placed Ireland's banks under review for possible downgrade and downgraded the country's sovereign credit rating after Dublin released its austerity budget yesterday.

The Irish government yesterday revealed its four-year austerity plan with €15bn ($20bn) of cuts to be implemented by: reducing the minimum wage; cuts to public sector pay and jobs; and slashing welfare payments by €2.8bn ($3.7bn).

Moody's has today placed the short-term bank deposit and debt ratings of Bank of Ireland, EBS Building Society and Irish Life & Permanent under review for possible downgrade.

It also placed the dated subordinated debt of EBS and certain debt classes of Allied Irish Banks on review for possible downgrade.

It says: "This is because a multi-notch downgrade of the Irish sovereign is now the most likely outcome of the on-going review of the sovereign rating, more than initially anticipated in October 2010 when the rating agency initiated its review of other Irish bank ratings."


Meanwhile, Standard & Poor's has lowered its long-term sovereign credit rating on the Republic of Ireland to A from AA- and its short-term rating to A-1 from A-1+.

Both the long and short-term ratings were placed on Creditwatch with negative implications but S&P said it had delayed publishing the ratings changes due to the new requirements under EU law for CRAs.


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READERS' COMMENTS
2010-11-25 10:22:27 | Kurt
I saw the same thing happening with Dexia in Belgium and with KBC in Belgium. Europe and the government will do everything to save the bank. Shares of both banks were at a record low. I bought the shares by then and now they have gone up by a factor of 10. I think same thing will happen with AIB

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