Monday 19 February 2018

AIB's sale of Polish assets not enough to secure S&P upgrade

THE €3.1bn sale of its Polish assets has not been enough to secure AIB a ratings upgrade from agency Standard & Poor's (S&P), which yesterday said the Irish bank "still has much to achieve", writes Laura Noonan.

The commentary came as the influential ratings agency re-affirmed its "negative" outlook on AIB, suggesting the bank may be downgraded from its core A-/A-2 trading ratings.

AIB was celebrating a €2.5bn capital boost from the Polish transaction last weekend, edging the bank closer to its target of raising €7.4bn in capital by the end of the year.

In a detailed note, S&P described the Polish sale as "the first major step of a multi-layer process" to recapitalise and restructure the bank.

"The outlook is negative, reflecting our opinion that AIB still has much to achieve in its €7.4bn capital raising programme, combined with our opinion that we do not foresee a quick, near-term improvement in AIB's relatively weak standalone credit profile," said S&P analyst Nigel Greenwood.

The agency said the rating could fall "if we consider that AIB's recapitalisation plans are unlikely to be fully executed in 2010", or if AIB's earnings are weaker than expected.

The "negative watch" could be removed, S&P said, "if we observe greater clarity on the strategic direction of AIB".

AIB managing director Colm Doherty said last week that he expected to be able to announce further disposals "in a couple of weeks".

The sale of AIB's 22pc stake in US bank M&T could generate up to €1.3bn while its UK divisions could generate €1.1bn.

Irish Independent

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