Relative credit rating of BNZ ‘unchanged’

Press, 18 February 1989, Page 1

Relative credit rating of BNZ ‘unchanged’

By

PATTRICK SMELLIE

in Wellington The Bank of New Zealand’s credit rating by an Australian rating agency has not changed relative to other Australasian banks, the managing director of the Australian Rating Agency, Mr Jeff Paterson, said yesterday. The bank put out a statement yesterday because of reports that its rating had fallen. The rating was revised with that of all banks monitored by the agency last October, and went from AA-plus to AA-minus, which the National Bank of New Zealand also shares. The National Bank’s rating changed from AAA (a higher

rating than AA-plus) to AAminus, because the bank’s majority shareholder, the British-based Lloyd’s Bank, had an AA-minus rating. A subsidiary bank could not have a higher rating than its parent, Mr Paterson said. The revision was intended to make the agency’s ratings comparable on an international basis. The BNZ’s credit rating had then been re-examined after the general revision, and confirmed at AA-minus in December of last year, he said. The rating partly reflected the fact that the BNZ was New Zealand’s largest bank, and therefore more exposed than

others to the relatively poor performance of the New Zealand economy. On the positive side, however, the fact that the BNZ had the Government as a majority shareholder increased its creditworthiness. A sale of the bank did not necessarily mean the bank’s credit rating would fall. If it had been sold to a company with a lower credit rating, such as Brierley Investments, Ltd, which bid unsuccessfully for the bank last year, its rating would have to drop. If sold to an institution with a stronger credit rating, such as another of last year’s bidders, the

National Australia Bank, it could be expected to rise, Mr Paterson said. A spokesman for the BNZ said the bank’s ratings for short-term debt with the main international credit rating agencies Moody’s, and Standard and Poors, stood at Pl and AA-plus — two of the highest ratings available. The bank had not been assessed for long-term debt by either agency, he said. Credit ratings are important to banks as a determining factor in interest rates charged on borrowing from ’ other banks, and in determining their relative standing in the international financial markets.