Irish Life and Permanent has suffered two downgrades from rating agencies today. Both Moody's and Fitch Ratings say that due to recent senior level resignations and the economic downturn they were cutting IL&P ratings.

Ratings agency Moody's said it was downgrading the long-term bank deposit rating and the senior debt rating of Irish Life & Permanent to A1 from Aa3 because of the rapid deterioration in the economic environment in Ireland.

It also reduced IL&P's bank financial strength rating and said it may look at further downgrades.

It says IL&P's profitability is likely to be negatively affected in both the banking and the life assurance businesses.

Moody's said it expects Irish Life and Permanent's banking business provisioning to increase. However, the rate of increase will be at lower levels than its peers due to the make up of the loan portfolio which is overwhelmingly residential mortgage based, it added.

It said that profitability in the life assurance business is also likely to be lower, especially on the retail side, as sales volumes are lower and management fees reduce.

The credit rating agency said the review for another possible downgrade of the bank financial strength rating will focus on IL&P's corporate governance after revelations of the funding it provided to Anglo Irish Bank as well as its ability to continue to up to now relatively stable performance despite the resignations of its senior management.

Moody's last rating action on IL&P was in July 2008 when it changed its outlook from stable to negative.

IL&P on Fitch's negative watch
Fitch Ratings said it was placing IL&P's individual rating of 'B/C' on a negative rating watch. It said this reflected its concerns over the placing by ILP of a collateralised deposit with Anglo Irish Bank last September.

It also noted that the bank's CEO, Finance Director and Head of Group Treasury have resigned over the incident.

'In the context of a sharp deterioration in economic growth in Ireland and dislocated financial markets, Fitch is concerned by the loss of these senior members of ILP's management and the time it may take to replace them'.

It added that it was also concerned about possible breaches in procedures and any rating action may be influenced by how the regulators treat the incident.

UNITE not happy with management
Meanwhile, the UNITE trade union has written to the board of Irish Life and Permanent to express the view that senior management, including chairperson Gillian Bowler and Interim CEO Denis Casey, no longer retain the confidence of the workforce.

The union represents 2,500 workers at the institution - half of IL&P's 5,000 strong workforce.

Ahead of today's staff briefings by management throughout the company, UNITE said in a letter to the group's head of Human Resources, that last week the bank had risked sacrificing the security and tenure of its members' jobs by attempting to support the now resigned CEO Denis Casey.

The letter claimed that UNITE's members, bank officials and employees had behaved in exemplary fashion throughout the current financial crisis, but that the same did not hold true for senior management.

Last week it emerged that Irish Life and Permanent transferred a total of €8.2 billion to support Anglo Irish Bank. The Financial Regulator is investigating the transactions.

In response, Irish Life and Permanent repeated the Board's strong disapproval of and disappointment with some of the measures used to support Anglo Irish Bank last year.

In a letter to the UNITE union, it said the board is now focused on ensuring full co-operation with investigations taking place and ensuring that the businesses in the group remain focused on meeting the 'considerable' challenges at hand.

'In particular, the board wishes to state its full confidence in the Chairman and its full support for her at this difficult time,' a letter from the group says.

'The board believes that it is important for all employees that we don't allow ourselves to become distracted from the real challenge facing the group at this time,' it concluded.

Shares in Irish Life & Permanent closed almost 13% lower this evening at €1.26 in Dublin - down 18 cent.