Fitch downgrades Australia's big banks

PanARMENIAN.Net - Fitch on Friday, Feb 24, downgraded the prized credit ratings of three of Australia's big four banks, citing higher funding costs.

According to AFP, it downgraded by one notch Commonwealth Bank, Westpac Banking Corp., and National Australia Bank Ltd. to AA minus from AA. Australia and New Zealand Banking Group, which already had a AA minus rating, remained unchanged.

It follows Standard & Poor's downgrading of the credit ratings of all four banks from AA to AA minus in December as part of changes to the way it assesses risk.

"In Fitch's view, wholesale funding, particularly when sourced cross borders, has become more vulnerable to swings of confidence," it said in a statement explaining its move. "Despite some improvement since 2008, all four banks retain a reliance on wholesale funding, particularly from offshore markets."

Despite the downgrade, the four major Australian banks remain among the strongest for Fitch globally.

"This reflects strong domestic franchises, robust risk management frameworks, solid profitability, competent liquidity management and sound and improving capital positions," it said. "The banks also benefit from, and contribute to, a solid domestic operating environment, while the Australian prudential regulator has proven itself to be conservative and hands-on."