Fitch Ratings has downgraded Alliance & Leicester, saying the action reflects the lender’s weak access to funding compared with higher rated banks.
A&L’s long term issuer default rating was cut to A+ from AA- and the short term IDR to F1 from F1+.
The outlook for A&L’s long term IDR was changed to stable.
Fitch says the ratings reflect A&L’s weaker prospects for reporting growth in profitability in 2008 and 2009, in view of higher funding costs and possible further writedowns on its structured credit portfolio.
A Fitch statement says: “These ratings also take account of the uncertainty surrounding the UK housing and mortgage lending market. A&L’s capitalisation is acceptable.
“The sound asset quality of A&L’s residential mortgage book and its ability to pre-fund its business into Q1 2009 are also incorporated into the ratings and underpin the stable outlook.”