(16 March 2004 – Australia) Standard & Poor’s has reacted to PricewaterhouseCoopers’ findings on National Australia Bank’s foreign exchange losses by downgrading the bank’s counterparty credit rating from AA to AA-.However, the ratings agency said the outlook on NAB was stable, and that S&P was maintaining its A-1+ short term rating.
“The downgrade reflects material and multiple breakdowns in NAB’s risk management processes and weaknesses in the bank’s corporate governance,” S&P credit analyst Craig Bennett said.
He said the bank’s AA- rating was underpinned by NAB’s robust core franchise in retail and business banking, its diversified business base, and strong financial profile.
“The stable outlook reflects our expectation that NAB’s core franchise and financial strength have not been materially compromised and our belief that management will enact sufficient improvements in risk controls and cultural change to support the rating,” Bennett said.