Over the weekend, Bank of Ireland went through some major changes to their structure.
This is needed to avoid a future bail out. Fitch, one of the world’s top three credit ratings firm, said the Irish banking system had around 15 percent of non-performing loans. This is about three times the average amount of the European Union countries.
Despite this, Fitch still gave Ireland a rating of A because of the potential economic growth. They gave Ireland this rating on Friday because the economy is supposed to grow 3.5 percent this year which makes Ireland one of the top growers from the EU area for the third consecutive year.
Even with this high rating, Fitch warns Irish banks that this massive amount of problem loans is weighing the country’s rating down.
Bank of Ireland responds by restructuring their equity to protect Ireland if a crisis occurs. This new system protects the Irish bank accounts and minimizes taxpayer bailout.
How it works?
Bank of Ireland will issue two types of equity: senior and junior. This puts the liability of crisis to …