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S&P slashes Anglo Irish’s credit rating
STANDARD & Poor’s yesterday cut the credit ratings of nationalised Anglo Irish Bank and said without support from the state it would be in a weak financial position.
S&P lowered the bank’s long- and short-term credit ratings to “BBB+/A-2” from “A-/A-1”, adding that its stand-alone long-term rating would be six notches lower than that without state help.
“Anglo’s current stand-alone financial position is, in our view, weak and reliant on funding support from the Irish Central Bank,” S&P said in a statement.
Anglo Irish Bank Chairman Donal O’Connor told a parliamentary hearing last week the board had considered the option of an “orderly wind-down” of the institution but decided to remain a going concern.
Anglo Irish is set to receive up to €4bn ($5.6bn) from the state and O’Connor said the government would be left with a much higher bill if the bank was wound up, causing a flight among investors who provide most of its funding.
“Anglo intends to significantly downsize its asset base to match its funding position with the aim of stabilizing its financial profile,” S&P said.
“Anglo has announced that over time it intends to develop a broader business banking franchise. We consider that this is a highly demanding plan.”
S&P said the outlook on the rating was negative, reflecting “continuing uncertainties regarding Anglo’s future capital needs, possible EU state aid implications, and business plan execution risk”.