Saturday 17 March 2018

S&P lifts credit ratings across the Irish banks

Bank of Ireland has been lifted from
Bank of Ireland has been lifted from "junk" to the better regarded "investment grade" status
Donal O'Donovan

Donal O'Donovan

Standard & Poors (S&P) has lifted its debt rating for Bank of Ireland to "investment grade" for the first time since 2011.

The agency forecast that the economy here will grow by 4.2pc this year and by 3.8pc in 2016.

It also expects the Government to begin to sell off the first tranche of AIB shares over the next few months, following the reduction of the State holding in Permanent TSB to 75pc last spring.

The moves are among a raft of updates on Irish banks issued by S&P yesterday.

A rating upgrade will allow Bank of Ireland to tap a wider pool of potential investors for its shares and bonds. But there is a sting in the tail for customers. S&P revised rating across the Irish banks in part because of the lenders' return to profit on the back of improved lending margins, with little prospect of outside banks coming in to change that.

"We view the post-crisis structure of the industry as stable with relatively few, mostly domestically focused, players."

While competition could be a boon to customers, S&P said the current market structure lends itself to a more "rational risk-return profile than before the crisis".

It lifted Bank of Ireland's credit rating to BBB- from BB+, to take it from "junk" to the better regarded "investment grade" status, with a positive outlook - meaning a further upgrade to A status could be on the cards.

AIB's rating was lifted to BB+ from BB, outlook stable.

Permanent TSB raised to BB- from B+; outlook stable, and KBC Bank Ireland outlook was lifted to stable from negative.

Irish Independent

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