Credit rating agency Standard & Poor's has dropped the Irish banking system from its second ranked group of countries to its third.
It says the main reason for the move is the damage to the reputation of the industry caused by the fall-out from events at Anglo Irish Bank.
Late last year, it dropped Ireland from the top tier, known as Group 1. Ireland is now in Group 3, with countries such as Portugal, Austria and Japan.
The agency's Banking Industry Country Risk Assessment (BICRA) ranks countries' banking systems according to their strengths and weaknesses, with the strongest in Group 1 and the weakest in Group 10.
S&P says investors' confidence in the regulation of Irish banks has weakened. 'Overall, we consider that the regulator has shown some reluctance to intervene, particularly in Anglo's case,' the report said, referring to the controversies over loans to directors and loans given by Anglo to a group of investors to buy shares in the bank last year.
