New Zealand banks have ratings cut
(30 May 2011 – New Zealand) New Zealand’s four major banks have had their ratings cut one notch by Moody’s Investor Service as the economy struggles to recover from a prolonged downturn and major earthquakes.
The downgrade comes as ratings agencies step up bank vigilance following the collapse of Lehman Brothers in September 2008 and the subsequent backlash against ratings agencies that failed to pick up quickly enough on warning signs of disaster.
Moody's said the outlook was now stable for the banks, all owned by the major Australia banks, which were hit with a similar downgrade last week.
'The one-notch downgrade of (the four major banks) reflects the ongoing impact of the challenging economic environment in New Zealand,' Marina Ip, a Moody's assistant vice-president, said. 'The local economy remains subdued, with GDP now forecast to show stronger growth in the year to March 2013, a year later than forecast last year.'
Last week, the New Zealand Treasury said the country’s economy grew 1 percent in the year ended March 31 and would grow 1.8 percent in the current fiscal year. Both estimates were lower than earlier projections.
New Zealand's economy is struggling to get on its feet after two earthquakes devastated the country's second-largest city, Christchurch, in less than six months.
Rebuilding would not spur the economy until next year, Moody's said.
The New Zealand banking sector is dominated by Australia's four large retail banks: Westpac, ANZ, Commonwealth - which owns ASB Bank - and National Australia Bank, which owns Bank of New Zealand.
Moody's said the major New Zealand banks were structurally sensitive to conditions in wholesale funding markets.
Moody's said the outlook was now stable for the banks, all owned by the major Australia banks, which were hit with a similar downgrade last week.
'The one-notch downgrade of (the four major banks) reflects the ongoing impact of the challenging economic environment in New Zealand,' Marina Ip, a Moody's assistant vice-president, said. 'The local economy remains subdued, with GDP now forecast to show stronger growth in the year to March 2013, a year later than forecast last year.'
Last week, the New Zealand Treasury said the country’s economy grew 1 percent in the year ended March 31 and would grow 1.8 percent in the current fiscal year. Both estimates were lower than earlier projections.
New Zealand's economy is struggling to get on its feet after two earthquakes devastated the country's second-largest city, Christchurch, in less than six months.
Rebuilding would not spur the economy until next year, Moody's said.
The New Zealand banking sector is dominated by Australia's four large retail banks: Westpac, ANZ, Commonwealth - which owns ASB Bank - and National Australia Bank, which owns Bank of New Zealand.
Moody's said the major New Zealand banks were structurally sensitive to conditions in wholesale funding markets.
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