Ireland's guarantee for UK's post office
Published 16/10/2011 | 05:00
THE Irish taxpayer may find themselves on the hook to guarantee savers in the UK Post Office, according to ratings agency Moodys.
Bank of Ireland -- in which the State is a substantial shareholder -- runs the British Post Office financial services arm, through its subsidiary, Bank of Ireland (UK)
"BoI UK is a substantial source of deposit growth for BoI and is likely to remain so in the future given its strong Post Office franchise in the UK," said Moodys in a note last week.
As a result of the importance of these deposits as a stable source of funding for BoI, we believe there is an increased likelihood that the Irish Government would provide support to BoI (UK) through BoI.
Moodys reversed its Bank of Ireland (UK) position last week, downgrading its deposit ratings.
Earlier, it had lifted its long-term deposits rating based on the expectation of UK government support in the case of anything going wrong.
However, Moodys now believes that BoI (UK) can no longer count on any help.
"The Ba1 long-term deposit rating now incorporates one notch of parental support from Bank of Ireland and no UK systemic support. The outlook is negative," according to Moodys.
Sunday Indo Business