Standard & Poor's cuts Allied Irish Banks rating

8th October 2010, Comments 0 comments

Ratings agency Standard & Poor's on Friday cut the credit rating of Allied Irish Banks, citing the extra capital that it needs to raise.

S&P said in a statement it had slashed the group's long-term rating to BBB+ with a negative outlook from A- previously. The agency has also downgraded AIB's lower tier 2 debt ratings to BB from BBB+.

"The rating action reflects our view that AIB's reputation has deteriorated further as a result of the higher level of capital that it is required to raise by its regulator and due to government-imposed management changes," said S&P credit analyst Nigel Greenwood in the statement.

"In our opinion, the ability of AIB to return to an 'a' category stand-alone credit profile is unlikely for a number of years."

The crisis-hit Irish bank, which is 19-percent owned by the Irish state after a massive bailout, has been ordered to raise a total of 10.4 billion euros.

S&P added that the negative outlook reflected a "downside risk" to a recovery in the bank's earnings.

The agency also has an "expectation that AIB's significant reliance on funding and liquidity support from the authorities will persist for the foreseeable future."

It added that "a degree of uncertainty that persists over AIB's business disposal program."

Allied Irish Banks, in deep trouble over bad loans, had said on Thursday that it would seek to raise around 1.5 billion euros (2.0 billion dollars) from the sale of its stake in US group M&T Bank Corp.

© 2010 AFP

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