S&P slashes Anglo Irish's credit rating

City A.M. Reporter
STANDARD&nbsp;&amp; Poor&rsquo;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.<br />
<div>S&amp;P lowered the bank&rsquo;s long- and short-term credit ratings to &ldquo;BBB+/A-2&rdquo; from &ldquo;A-/A-1&rdquo;, adding that its stand-alone long-term rating would be six notches lower than that without state help.<br />&nbsp;</div>
<div>&ldquo;Anglo&rsquo;s current stand-alone financial position is, in our view, weak and reliant on funding support from the Irish Central Bank,&rdquo; S&amp;P said in a statement.<br />&nbsp;</div>
<div>Anglo Irish Bank Chairman Donal O&rsquo;Connor told a parliamentary hearing last week the board had considered the option of an &ldquo;orderly wind-down&rdquo; of the institution but decided to remain a going concern.<br />&nbsp;</div>
<div>Anglo Irish is set to receive up to &euro;4bn ($5.6bn) from the state and O&rsquo;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.<br />&nbsp;</div>
<div>&ldquo;Anglo intends to significantly downsize its asset base to match its funding position with the aim of stabilizing its financial profile,&rdquo; S&amp;P said.<br /><br />&ldquo;Anglo has announced that over time it intends to develop a broader business banking franchise. We consider that this is a highly demanding plan.&rdquo;<br />&nbsp;</div>
<div>S&amp;P said the outlook on the rating was negative, reflecting &ldquo;continuing uncertainties regarding Anglo&rsquo;s future capital needs, possible EU state aid implications, and business plan execution risk&rdquo;.</div>