Credit rating agencies in the firing line
(12 August 2011 – Australia) Ratings agencies "haven’t covered themselves in glory" in the lead up to the global financial crisis according to Commonwealth Bank (CBA) chief executive Ralph Norris.
The comments come amid the turmoil sparked this week by Standard & Poor's, which issued a historic downgrade to the US credit rating. The same credit rating is also reviewing the AA ratings of Australia's biggest lenders as part of a wider review of the way it grades banks around the world.
'Ratings agencies really haven't covered themselves in glory over the last decade or so. What with the global financial crisis, they always seem to be a bit late to the party in my view,' Mr Norris said at an investor briefing.
Meanwhile, Mr Norris said further "lumps and bumps" should be expected on global markets with the financial crisis still playing out. However CBA has planned for this by improving the health of its balance sheet.
Mr Norris said he was confident CBA could operate for a long period of time if global credit markets froze again.
"Certainly we took a view that the global financial crisis - as it’s been termed - has not yet been completed and while we may have come over the biggest hump there's going to be lots of lumps and bumps along the way," Mr Norris said.
"As a result of that we've taken a very conservative position with regards to our balance sheet and liquidity to make sure we're not going to have any surprises," he said.
A second ratings agency, Moody’s, downgraded the credit ratings of Australia's big banks by a notch in May. Even with the downgrade each of the major bank’s still remain in the highly-coveted AA-band.
If Standard & Poor's decided to push ahead with a downgrade the Australian sector it would make little difference to the way the banks go about their business, Mr Norris said.
'Ratings agencies really haven't covered themselves in glory over the last decade or so. What with the global financial crisis, they always seem to be a bit late to the party in my view,' Mr Norris said at an investor briefing.
Meanwhile, Mr Norris said further "lumps and bumps" should be expected on global markets with the financial crisis still playing out. However CBA has planned for this by improving the health of its balance sheet.
Mr Norris said he was confident CBA could operate for a long period of time if global credit markets froze again.
"Certainly we took a view that the global financial crisis - as it’s been termed - has not yet been completed and while we may have come over the biggest hump there's going to be lots of lumps and bumps along the way," Mr Norris said.
"As a result of that we've taken a very conservative position with regards to our balance sheet and liquidity to make sure we're not going to have any surprises," he said.
A second ratings agency, Moody’s, downgraded the credit ratings of Australia's big banks by a notch in May. Even with the downgrade each of the major bank’s still remain in the highly-coveted AA-band.
If Standard & Poor's decided to push ahead with a downgrade the Australian sector it would make little difference to the way the banks go about their business, Mr Norris said.
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