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Moody's downgrades Irish banks

Pressure mounts on Eurozone as the Moody’s credit rating agency labels Irish banks’ ratings as junk.

A week after downgrading Ireland's sovereign debt, Moody's has negatively assessed the long term deposit ratings of three of the island's major banks: Allied Irish Banks, EBS and Irish Life & Permanent.

All three saw their ratings go down by two notches to Ba2, reaching the junk status. Meanwhile, Bank of Ireland was also downgraded but it remains one notch above its competitors at Ba1.

Moody's justified its decisions by arguing it had doubts about the country's capacity to restructure its debt. It also warned that a "further deterioration would likely follow", if the country did not manage to get a grip on its fiscal crisis.

Borrowing prices and interests rates for the Irish debt soared as a consequence of the agency's decisions. This came about despite last Friday's announcement by the International Monetary Fund (IMF) and the European Union (EU) -- the main providers of the country's €85bn (£74.7bn) bail out plan -- that the country was making "good progress" in the path to its economic recovery.