Credit rating agency Moody's has downgraded a number of Irish Nationwide's long-term ratings, though debt covered by the Government's guarantee scheme is not affected.
It has also lowered its rating of the society's financial strength to D minus. Moody's said this was because it expected loan losses from Irish Nationwide's commercial property loans to increase, while its report also referred to 'poor asset quality' within its residential mortgage loan book.
It said there had been a rapid deterioration in land and property values in Ireland and the UK, as well as worsening economic conditions. Moody's said Irish Nationwide's current business model would need to change, as around 80% of its loan book was currently linked to commercial property.
Agencies such as Moody's rate the ability of banks and other companies to meet their financial obligations and their reports are watched by those who lend money in capital markets.