Moody's credit rating agency warned today that it would most likely have to downgrade Irish sovereign debt by several notches in view of the costs of an EU-IMF rescue for Ireland.
'A multi-notch downgrade, leaving the rating of the Republic (of Ireland) still within the investment-grade category, is now the most likely outcome of our review of the sovereign credit,' Moody's said.
Meanwhile, the IMF said that it stood ready to help Ireland and that an IMF team currently in Dublin would begin swift discussions with the authorities here.
The Governor of the Central Bank, Patrick Honohan, said that the Government's announcement to apply for support set economic and financial policy on a secure path.
He added that the banking system retained the support of not only the Central Bank but of European institutions too.
The Government last night moved to reassure depositers and investors that it was working to stabilise the banking sector. Further money will be available to recapitalise the banks, but that could again increase the state's ownership of those businesses.
Last night Taoiseach Brian Cowen said the steps would result in smaller banks. The Government said the steps would mean restructuring and addressing the debts of the lenders.
Over the weekend intensive discussions took place to try to reshape the Irish banks and make them less of a risk for the state. Those talks focused on possible mergers and selling assets.
But an announcement of the final shape of the banking system may be weeks away.
Dukes urges 'massive and decisive' action
Anglo Irish Bank chairman Alan Dukes has told a conference on ethics in corporate governance that it is time for an open discussion on the structure of the banking system we should aim for.
He said there was a danger in the notion that not all of the EU/IMF package would be drawn down, as there was a strong case for taking massive and decisive action quickly to produce at least two viable banks for the Irish system. He said the sooner this was done, the sooner we could return to some sort of normality.
Meanwhile, the Dublin market has slipped almost 0.5% in mid-morning trade, with the banking shares all lower after the weekend news.
AIB shares are down 1.5%, while Bank of Ireland has lost almost 15% and Irish Life and Permanent have dropped 18%.
European markets are less than 0.5% higher so far this morning.
