Fitch Ratings has today downgraded the short-term Issuer Default Ratings of AIB and Bank of Ireland to F1 from F1+ and removed both ratings from Rating Watch Negative (RWN).
The move follows the extension of the State's bank guarantee by the Dáil on Thursday last.
The agency also announced today it has downgraded EBS and Irish Nationwide Building Society's short-term term IDRs to 'F2' from 'F1+' and removed both ratings from RWN.
Fitch has affirmed Anglo Irish Bank Corporation's (Anglo) Short-term IDR at 'F1+'.
All guaranteed securities will continue to be rated at 'AA-'/ 'F1+', reflecting the Long- and Short-term IDRs of the guarantor. Non-guaranteed securities will be rated according to the IDR of the issuer.
In a statement, the agency said the rating actions reflect Fitch's view that the government's new scheme for guaranteeing the eligible liabilities of certain Irish credit institutions is less comprehensive than the existing scheme. As a consequence, institutions will gradually have a smaller proportion of their short-term liabilities guaranteed by Ireland ('AA-'/'F1+'/Stable), which will raise their credit risk, it said.
"Nonetheless, the support which the Irish Government provides under the existing scheme, the establishment of the National Asset Management Agency and previous or projected capital injections continues to underpin AIB, BoI, EBS and INBS's Short-term IDRs," it said.
"AIB's and BoI's Short-term IDRs are notched higher, compared with EBS and INBS, because their Support Rating Floors are higher, at 'A-', respectively. The Support Rating Floors of EBS and INBS are rated 'BBB-'/Rating Watch Positive. The Irish government's 100 per cent ownership of Anglo leads Fitch to believe that in the short-term, the bank should continue to benefit from the strongest capacity to repay financial commitments, which is why the agency affirmed its Short-term IDR at 'F1+', it added.
All guaranteed securities will continue to be rated at 'AA-'/ 'F1+', reflecting the Long- and Short-term IDRs of the guarantor, Ireland. Non-guaranteed securities will be rated according to the IDR of the issuer.