Business

Moody's downgrades more Irish banks' to junk rating

Bank Of Ireland
Image caption Opposition parties have expressed opposition to further bank aid

Credit ratings agency Moody's has cut its rating of four Irish banks to junk status citing concerns over new funding which was due at the end of February.

The government says it will not make extra funds available before the general election on 25 February.

Opposition parties, who may form the next government, have expressed opposition to further bank aid.

Bank of Ireland, Allied Irish Banks, EBS Building Society and Irish Life & Permanent were all downgraded.

Anglo Irish Bank and Irish Nationwide, which have already been given junk status, were cut further.

Moody's says it is keeping the banks' credit ratings under review and has warned of further possible downgrades.

Burden sharing

Opposition party Fine Gael, currently leading the opinion polls, has suggested imposing 'haircuts' on senior bank debt-holders, forcing them to share the cost of any restructuring of bank debt following the election.

"The banks are hugely reliant on central bank funding, and that's not going to go away anytime soon. By potentially burden-sharing with senior debt holders, you are obviously potentially putting back the ability of banks to fund again in the market," Ross Abercromby, Moody's Irish banking analyst, told the Reuters news agency.

Moody's Investors Service is one of the "big three" credit ratings agencies, along with Standard & Poors and Fitch Ratings.

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