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Jul 8 2020, 08:00 IST/BST
Banks
Regulatory clarity and political pressure on interest on payment breaks
- Sectors : Banks
- Companies : permanent tsb Group | AIB Group | Bank of Ireland
Ratings
Ratings and price correct at time of issue
| Company | Rating | Date | Previous Rating | Date | Closing Price |
|---|---|---|---|---|---|
| AIB Group | OUTPERFORM | 23/01/19 | Neutral | 14/08/18 | 117c |
| Bank of Ireland | OUTPERFORM | 11/03/13 | Neutral | 14/08/12 | 187c |
| permanent tsb Group | NEUTRAL | 06/03/19 | Outperform | 01/08/18 | 52.0c |
DAVY VIEW
The European Banking Authority (EBA) clarification on the approach to interest for loan moratoria is useful, albeit the approach in Ireland has been clear — interest continues to accrue on a payment break. Political pressure is likely to persist from opposition parties, yet our analysis would indicate that the threshold set by the EBA would be problematic to meet, which would impact asset quality classification, provisions and risk weight intensity, and the borrower’s credit rating.
