Moody’s cuts four New Zealand banks

Moody's Investors Service said it downgraded the long-term ratings of ANZ Bank New Zealand Ltd., ASB Bank Ltd., Bank of New Zealand and Westpac New Zealand Ltd. to A1 from Aa3.

At the same time, the agency downgraded the banks' adjusted baseline credit assessments (BCAs) to a2 from a1, and the long-term counterparty risk assessments to Aa3(cr) from Aa2(cr).

The banks' BCAs of a3 and short-term ratings of Prime-1 of were affirmed.

The outlooks were revised to stable from negative.

Moody’s said the downgrade follows Moody's decision to downgrade the long-term deposit ratings to Aa3 from Aa2, and BCAs to a2 from a1, of their respective Australian parents, Australia and New Zealand Banking Group Ltd. (Aa3 stable, a2), Commonwealth Bank of Australia (Aa3 stable, a2), National Australia Bank Ltd. (Aa3 stable, a2) and Westpac Banking Corp. (Aa3 stable, a2), as announced on June 19.

The downgrade of the four banks' long-term ratings follows the same one-notch downgrade of the long-term ratings and BCAs for their respective parents.

Moody's said it incorporates one notch of affiliate support uplift into the A1 long-term ratings of the four New Zealand banks, given the rating agency's assessment of a very high likelihood of support from their Australian parents.

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