Global ratings agency S&P has warned that any “adverse findings” from APRA’s inquiry into CBA could lead to a credit downgrade for the bank.
In a statement responding to APRA's announcement yesterday that it is conducting a review into CBA, S&P Global Ratings warned that a credit downgrade for the bank is on the cards.
"We consider that the bank's credit profile is likely to weaken if there were any material adverse findings by this inquiry or any financial penalties, potential material damage to the bank's reputation and franchise, or any indications of weaknesses in its governance and risk management framework," said S&P in a statement released yesterday.
S&P said the pressures on CBA are "in addition" to the ratings agency's negative outlook on CBA and other major Australian banks, reflecting S&P's view of a "potential reduction in the Australian government's support for the systemically important banks".
"We will continue to reflect on today's inquiry announcement and evaluate the extent to which this news weakens our view of the bank's credit profile and the resulting impact on the ratings and outlook on the bank," said S&P.
"In our view, the appointment of an independent inquiry should be valuable in identifying any potential shortcomings and remedial actions following the civil penalty proceedings against CBA initiated by Australia's financial intelligence and regulatory agency AUSTRAC.
"We consider that erosion in confidence of the major stakeholders in the bank's corporate governance processes would likely also weaken its credit profile.
"We also believe that the timely approach taken by APRA to address this issue is commensurate with our views around the low risk institutional framework for the Australian banking system."
Wealth management relationships are under threat as clients look to switch providers driven by the impact of the royal commission. ...
S&P Dow Jones has announced a new addition to its global ESG index using enhanced ESG scores and granular data. ...
Investor confidence is on the rebound and the ASX hit a 12-year high on Monday. But it’s not all good news for the Australian economy. ...