Moody's lowers St. George Bank to B-

Moody's Investors Service said it downgraded St. George Bank's bank financial strength rating to B- from B, with a stable outlook. This downgrade concludes a review that began in Dec. 2008.

The outlook on the bank's long-term deposit and debt ratings of Aa1 were changed to negative. This is in line with the recent rating action on its parent, Westpac, whose bank financial strength rating of B and long-term ratings of Aa1 also carry a negative outlook.

Financial factors that were considered include the bank's stand-alone capital adequacy, funding and liquidity profile, Moody's said, and its borrower concentration metrics.

The bank's financial profile going forward resembles that of a B- rated bank, the agency said. The level of large relationship exposures is likely to remain high because the bank will retain certain relationship exposures on its balance sheet, Moody's said.

On the other hand, the agency said it expects an improvement in the bank's core equity levels as its capital instruments are redeemed and replaced with ordinary equity.

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