S&P downgrades 23 Australian institutions; ANZ, CBA, NAB and Westpac’s ratings unchanged

Standard & Poors has downgraded 23 Australian financial institutions, with the credit ratings agency citing the risk of a sharp fall in prices of properties. Among those reportedly affected include Bank of Queensland, AMP, and Bendigo and Adelaide. Meanwhile, ratings of ANZ, CBA, NAB and Westpac, the four largest lenders in Down Under, remain.

The agency said mortgage lenders in the country had to deal with a surge in bad debts in the event of a sharp correction in property prices. In a statement, Standard & Poors pointed that “all financial institutions operating in Australia are likely to incur significantly greater credit losses than present” once a sudden property market correction occurs.

"To reflect the increased risk, we have lowered our assessment of the stand-alone credit profiles (SACPs) of almost all financial institutions operating in Australia,” the agency said per the Australian Financial Review. The latest regulatory action should lead to an organised unwind of risks without any “significant increase” in credit losses, according to S&P.

The news comes after the agency’s decision to put 25 Australian banks and lenders on "negative watch" last year. Here are the other banks that were downgraded by the credit ratings agency: Auswide Bank, Community CPS Australia, Australian Central Credit Union, Fisher & Paykel Finance, Defence Bank, Greater Bank, Liberty Financial, G&C Mutual Bank, Newcastle Permanent, MyState Bank, Police Bank, Qudos Mutual, QPCU, Rural Bank, mecu, Members Equity Bank and Teachers Mutual.

The ratings of some financial institutions were downgraded to: AMP Bank (A+ to A), Auswide Bank (BBB to BBB-), Bank of Queensland (A- to BBB+), Bendigo and Adelaide Bank (A- to BBB+), Credit Union Australia (BBB+ to BBB), Defence Bank (BBB+ to BBB), G&C Mutual Bank (BBB to BBB-), Greater Bank (BBB+ to BBB), IMB (BBB+ to BBB), Liberty Financial (BBB to BBB-) ME Bank (BBB+ to BBB) MyState Bank (BBB+ to BBB), Investor Daily notes. S&P reportedly believes that the blow of a housing correction on these institutions will be amplified by the economy's external weaknesses.

S&P Global Ratings stressed that the outlook for Australian banks as a whole was kinder compared to its international peers. The global credit ratings specialist’s ratings for the four major banks and Macquarie was believed to reflect its expectation of government support in the event of a crisis.

Canada's big 6 banks have reportedly downgraded in credit ratings too. For more of this news, watch clip from The National below.

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