International credit rating agency Standard & Poor's has affirmed all its ratings on Allied Irish Banks, including its 'A/A-1' counterparty credit ratings, adding that it revised the outlook to "positive" from "stable".
It raised the outlook because of the "significant steps" AIB is taking to ensure the integrity of its risk management procedures following the Allfirst debacle.
S&P said that although AIB's key markets are currently affected by weaker economic conditions, it expects AIB to manage the slowdown in a controlled manner, particularly in the Irish economy.
Asset quality is expected to remain manageable, even allowing for some deterioration, S&P added.
The Allfirst fraud had a sizeable financial cost, but also highlighted weaknesses in the control environment, and failures in broader oversight in detecting frauds over a five-year period, S&P said. AIB has taken steps to tighten risk management and centralize its treasury activities, it added.
Allfirst merged with M&T Bank Corp in April 2003, giving AIB a 22.5 per cent stake in the merged entity.
Standard & Poor's believes the merger of Allfirst with M&T represents "a good solution to AIB's weakened US franchise."
S&P added: "The ratings on AIB also incorporate its Polish operations, which dilute group creditworthiness because of the weaker asset quality environment, and because they are unlikely to contribute fully to the group in the medium term."
AFP