S&P lowers A&L credit rating

Standard & Poor’s has lowered Alliance & Leicester’s long-term credit rating from A+ to A. But the credit rating agency insists that recent changes to the bank’s funding mix mean its outlook remains stable. S&P has removed the bank from its CreditWatch, where its long-term rating had been placed with negative implications on January 31.

Nick Hill, credit analyst at S&P, says: “This rating action follows A&L’s full-year results for 2007 and its outlook for 2008. As a result of difficult funding conditions, it has taken out various secured borrowing facilities with a range of banks.”

S&P describes the bank as prudent for bolstering its liquidity and funding profile while reducing its reliance on short-term funding. It adds that A&L’s new funding arrangements, diversity and strong asset quality should support its A rating. But it warns that A&L’s rating could fall further if the housing market or the wider UK economy weakens this year.