Thursday 23 February 2017

Fitch downgrades Rabobank and Danske

BANKS

Laura Noonan

Laura Noonan

TWO of the 'safest' banks trading in Ireland have been downgraded by ratings agency giant Fitch, narrowing the options for savers looking for ultra-safe places to put their cash.

The cut to the ratings of Rabobank and National Irish Bank's parent, Danske, were announced on Tuesday evening as part of a wider Fitch review of Europe's biggest banks.

While the precarious plight of the eurozone was the main cause for the review, Fitch also cited the continued "deterioration" in the quality of Danske's Irish loans as a contributory factor to its downgrade.

Significant

The ratings changes are significant because ordinary savers are increasingly conscious of putting their cash in highly rated banks.

Fitch has reduced Rabobank's long-term rating from AA+ to AA, a one-notch cut that leaves Rabobank with the highest rating in the Irish market.

The outlook is described as "stable", suggesting no imminent cuts.

Danske fell from A+ to A, pushing it below Nationwide Bank UK, which has an A+ rating. Fitch describe Danske's outlook as "negative", citing "profitability challenges".

Even after the downgrades, both banks remain well ahead of domestic players AIB and BoI, which have a BBB rating and a "negative" outlook.

Ulster, meanwhile, is one notch below Danske on A-.

The cut to Rabobank's rating was attributed to "material market and fundamental challenges facing many banks globally", as well as the "constraints" imposed by the bank's mutual status which make capital raising more challenging.

The broad global concerns were also cited in Danske's downgrade, but Fitch also noted the "continued asset quality deterioration" in the bank's "Danish and Irish operations".

Irish Independent

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