Bloomberg: Defaults May Return to Haunt Beleaguered Irish Mortgage Lenders

Standard & Poor's Ratings Services said on Jan. 26 Irish banks were riskier than it previously thought and predicted "high credit losses." S&P also reduced its ratings for Bank of Ireland Plc and Allied Irish Banks Plc. A month earlier, Morgan Kelly, an economics professor at University College Dublin, said banks faced "complete destruction" from mortgage losses as the rate of unemployment and the cost of borrowing rise. "The Irish loan book is going to have big defaults on it," said David McWilliams, a former economist at the country’s central bank. "When those defaults come through, the banks become nationalized, the rest of the shareholders get wiped out." Irish households are among the world’s most indebted after lending more than tripled in the decade through 2007.