Fitch Downgrades Commonwealth Bank, Westpac, National Australia

Fitch Ratings cut Commonwealth Bank of Australia (CBA), Westpac Banking Corp. (WBC) and National Australia Bank Ltd. (NAB) by one level, citing their dependence on wholesale funding markets that are “vulnerable to swings of confidence.”

The long-term issuer default rating on the three Australian lenders was cut to AA- from AA, Fitch said in an e-mailed statement today. It also reaffirmed the AA- rating of Australia & New Zealand Banking Group Ltd. (ANZ)

Fitch’s moves follow similar downgrades by Moody’s Investors Service in May, and Standard & Poor’s in December, partly because of their reliance on offshore funding markets. Australia’s so-called four pillar banks, so named for a law that prevents them buying each other, derive about 40 percent of their total funding from wholesale markets.

The downgrades “reflect the weaker funding profile of the major Australian banks relative to similarly rated international peers,” Fitch said in the statement. “Despite some improvement since 2008, all four banks retain a reliance on wholesale funding, particularly from offshore markets.”

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To contact the editor responsible for this story: Chitra Somayaji at

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