DBRS Places Allied Irish Banks p.l.c. Subordinated Debt UR Negative, at ‘A’

DBRS has today placed the ratings of all non-guaranteed, non-senior debt instruments of Allied Irish Banks p.l.c. (AIB or the Group), including its ‘A’ Dated Subordinated Debt rating, Under Review with Negative Implications. Today’s action does not impact AIB’s other ratings, including the senior non-guaranteed debt, which remains at A (high), and the government guaranteed debt, which remains AA.

This rating action follows the Irish Minster for Finance’s (the Minister) statement of 30 September 2010 indicating that, together with the Attorney General’s office, the Minister’s office is working on legislation that will enable the implementation of reorganisation measures specific to Anglo Irish Bank and Irish Nationwide Building Society (not rated by DBRS). Specifically, the legislation is expected to address the issue of burden-sharing by subordinated debt holders in the two above mentioned institutions.

Although the Minister’s statements regarding subordinated debt and loss burden-sharing do not directly impact the Group’s subordinated debt and DBRS does not expect that the resulting legislation will address AIB directly, DBRS views this development as establishing a precedent that notably increases the risk of loss for subordinated debt holders. In DBRS’s view, non-senior debt holders of the Irish banks will be increasingly required to share the burden of loss, should an institution become challenged. Accordingly, DBRS has placed the ratings of all non-senior, non-guaranteed instruments of the Irish Banks, including AIB, Under Review with Negative Implications.

In its review, DBRS will ascertain the ramifications of the legislation on holders of non-senior debt instruments of the Irish banks. DBRS anticipates completing its review once further details of the proposed legislation are revealed and enacted.

Notes:
All figures are in EUR unless otherwise noted.

The applicable methodologies are Global Methodology for Rating Banks and Banking Organisations and Enhanced Methodology for Bank Ratings – Intrinsic and Support Assessments, which can be found on our website under Methodologies.

This rating did not include issuer participation and is based solely on publicly available information.