Irish banks urged to set aside more money to cover bad loans

Irish banks urged to set aside more money to cover bad loans

Credit ratings agency Moody’s have warned that Irish banks will need to set aside much more money to cover potentially bad loans.

The same warning was issued to lenders in Spain, Italy and Britain.

In their global banking outlook for 2013, released today, Moody’s said: “We believe that many banks, in particular in Spain, Italy, Ireland, and the UK, require material amounts of additional provisions to fully clean up their balance sheets.

“Some banks have in recent years delayed full recognition of embedded loan losses, partly by restructuring loans,” the report added.

“This strategy of buying time limits a bank’s capacity for new lending and poses risks for creditors of European banks,” it said. The agency did not say how much extra money banks would need.

“Some banks have in recent years delayed full recognition of embedded loan losses, partly by restructuring loans,” the report added.

“This strategy of buying time limits a bank’s capacity for new lending and poses risks for creditors of European banks,” it said.

 

The agency did not say how much extra money banks would need.

Moody’s said it believes 2013 will be a volatile year for Europe’s banks, but expects their credit ratings to remain relatively stable after a raft of downgrades in 2012.

Leave a Reply