Australia banks may see credit rating cut, Moody's says

Moody’s Investor Service has put Australia’s four biggest banks on a credit downgrade review, saying they may be too dependent on international lending markets.

ANZ, Commonwealth Bank of Australia, National Australia Bank and Westpac currently hold the second-highest Aa1 rating.

However, Moody’s says they are exposed to shifts in investor confidence

The banks say they have been dealing with funding issues.

Underlying speed

Moody’s said that the review will focus on the international wholesale funding market and how it impacts the Australian banks.

A global credit crunch in 2008, and subsequent economic slowdown, hammered many of the world’s biggest banks.

Since then, banks have been looking at ways of raising funds in less volatile ways and have been increasing their deposits to limit exposure to international lending markets.

“The global financial crisis has underlined the speed with which shifts in investor confidence can impact bank funding, warranting a review,” said Patrick Winsbury of Moody’s in Sydney.

Moody’s acknowledged that despite the concerns, the Australian banks under review were stable and the country’s lending system was supported.

“Moody’s anticipates that after the conclusion of the review, their long-term senior unsecured debt ratings – which incorporated the prospect of systemic support – will remain within the Aa category,” the ratings agency said.