December 02, 2011
COMMONWEALTH Bank of Australia said today it doesn't expect any material impact on its funding plans after Standard & Poor's downgraded Macquarie and all four of Australia's big banks' credit ratings.
Macquarie today also moved to reassure investors its ratings downgrade will not impact the bank.
None of the other banks commented on their funding requirements, although National Australia Bank said a further improvement in its capital ratios "is a near-term objective".
CBA treasurer Lyn Cobley said the country's biggest bank has been increasing customer deposits and replacing more short-term wholesale funding with long-term wholesale funding.
"At this point we do not expect this to have any material impact on our funding plans or expected pricing of our new issuance," Ms Cobley said of the downgrade in a statement.
CBA, Westpac, Australia & New Zealand Banking Group and NAB were last night all downgraded one notch, from AA to AA-.
Investment bank Macquarie Group was downgraded to BBB from A-.
All four of the big banks noted they remain among the small number of banks in the world within S&P's AA categories.
Australian banks sidestepped the worst of the global financial crisis because they largely didn't invest in toxic US real estate debt, are more conservatively regulated and are buoyed by an Australian mining sector that's feeding fast-developing Asian economies including China.
The banks, however, rely heavily on offshore wholesale debt to fund large chunks of their loans books and are vulnerable to blowouts in credit spreads or credit freezes experienced during the credit crisis or amid current debt woes in Europe.
Macquarie today said S&P affirming the rating of Macquarie Bank, which does the bulk of the group's funding, "validates our strong capital, funding and liquidity position”.
Separately, Fitch Ratings said today Australian banks are generally well positioned to meet new regulatory requirements under the Basel III rules.
"Australian banks are already largely compliant with the new capital rules, although importantly, regulatory capital ratios will continue to be lower than under a fully harmonised Basel III framework due to APRA's conservative interpretation of the rules," said Tim Roche, a director in Fitch's Financial Institution group.
"The new liquidity rules pose a greater challenge, although ultimately this should be surmountable."
Article by Ross Kelly From: Dow Jones Newswires