DBRS Takes Various Ratings Actions on Anglo Irish Bank Corporation Limited

DBRS has today taken various rating actions on Anglo Irish Bank Corporation Limited (Anglo Irish or the Bank) and related entities.

DBRS has designated Anglo Irish as a Critically Important Banking organisation (CIB) in Ireland. Following today’s action, DBRS has confirmed certain ratings, including the Bank’s A (high) Long-Term Deposits and Long-Term Debt ratings. The trend on these ratings has been revised to Stable from Under Review – Developing.

The CIB designation follows DBRS’s introduction of a floor rating in Ireland. As a CIB, Anglo Irish ratings are now subject to the floor rating. For CIBs operating in Ireland, DBRS has assigned a floor rating of A (high) for Long-Term Debt and Deposits and R-1 (middle) for Short-Term Debt and Deposits at the bank level. In the cases where there is a holding company, the floor has been set at “A” and R-1 (middle). The trend on the floor ratings is Stable. The level of the floor reflects DBRS’s expectation that the Irish government will provide support, if necessary, to prevent any CIB from weakening below this rating level. DBRS views A (high)/R-1 (middle) as the level of creditworthiness that market participants demand for CIBs to be viewed as essential counterparties, as CIBs need to be perceived as reliable partners in undertaking a wide range of financial transactions. DBRS views the floor as the level of support at which the Irish government will sustain CIBs to ensure that its financial system continues to be fully functioning.

Separately, DBRS has today placed the AAA ratings for Anglo Irish’s Long-Term Debt and Long-Term Deposits maturing on or before 29 September 2010 (guaranteed debt) Under Review with Negative Implications. The R-1 (high) ratings for Short-Term Debt and Short-Term Deposits maturing on or before 29 September 2010 are unaffected by today’s ratings action. The Under Review with Negative Implications status for the Bank’s government guaranteed debt considers DBRS’s concerns that the deterioration in economic prospects and the lower than expected tax revenues during the first two months of 2009 may lead to a change in DBRS’s internal assessment of the Republic of Ireland.

All other long term ratings for Anglo Irish and related entities, including ratings for Capital Securities and for Perpetual Preferred Securities remain Under Review with Negative Implications. DBRS acknowledges that the Minster of Finance has stated that Anglo Irish will continue to service its Tier 1 hybrid instruments; however, DBRS is increasingly concerned that Anglo Irish could temporarily forgo cash distributions under the terms and conditions of these instruments in order to conserve capital to support the Bank.

Notes:
The applicable methodologies are, Analytical Background and Methodology for European Bank Ratings, Second Edition and Enhanced Methodology for Bank Ratings – Intrinsic and Support Assessments, which can be found on our website under Methodologies.

This is a Corporate (Financial Institutions) rating.