The downgrade of Irish Life & Permanent stock by rating agency Standard Poor’s (SP) yesterday has contributed to a torrid morning for the bank’s shares which fell over 12 per cent in early trade in Dublin this morning.
At 10.30am the stock had rebounded slightly to €5.83, down 11.8 per cent, its lowest price in over a decade.
More than 32 per cent has been wiped off the value of Irish Life & Permanent shares over the past five days.
Today's drop follows a fall of almost 10 per cent yesterday on the back of the SP rating and negative economic data, particularly that relating to residential building and mortgages. European banking stocks were also lower today on concerns about future writedowns and profitability.
The SP report said asset quality concerns among Irish banks was a major issue with loans to some property and construction developers deteriorating as the sector struggles.
Irish Life & Permanent had its long-term counterparty credit rating downgraded to "A" from "A+".
SP said the downgrade reflects the bank's challenged business and financial position in its banking division due to ongoing wholesale funding disruption.
Other banking stocks were also struggling this morning with Anglo Irish Bank off over 5 per cent at €5.63 at 10.30am, having lost over 8.5 per cent yesterday.
SP lowered Anglo Irish Bank's outlook from stable to negative yesterday, due to what it says is the bank's concentration on commercial property-backed lending. Anglo Irish Bank shares have dropped 15 per cent in the last five days.
While the ratings for the country's largest banks, AIB and Bank of Ireland were affirmed by SP, their outlook was revised down from positive to stable.
Bank of Ireland shares, which gave up 5.6 per cent yesterday, dropped a further 3.5 per cent today to €5.32, a ten-year low. AIB shares were almost 4 per cent lower at €9.41 this morning.
The Iseq Index of Irish shares, which is heavily weighted towards banking stocks, was 3.3 per cent lower at 10.30am, at 5,036.
