Moody's lowers National Bank rating

Moody's Investor Services has reaffirmed its ratings for ANZ Bank but downgraded its view of the National Bank after last week's announcement that ANZ would buy National.

ANZ Banking Group is buying the National Bank of New Zealand for $6.28 billion in New Zealand's biggest corporate transaction.

"ANZ's ratings were affirmed at Aa3 for long-term deposits and senior debt, Prime-1 short-term and B for bank financial strength," Moody's said.

"ANZ NZ's ratings were affirmed at Aa3 for long-term deposits and senior debt, Prime-1 short-term; and C-plus for bank financial strength. The outlook for all the ratings is stable."

Moody's downgraded the National Bank's ratings for long-term deposits and senior debt from Aa1 to Aa3, which it said reflected the bank's new ownership.

Its bank financial strength rating of C-plus and short-term ratings of Prime-1 were not changed.

Moody's said the ratings outlook was stable, and the purchase of the National Bank from Britain's Lloyds TSB Group would strengthen ANZ's position in New Zealand. "In addition, it will underpin ANZ's efforts to diversify its credit exposures," the agency said. "These factors offset reductions in core capital, customer funding and profitability at ANZ that will result from the transaction.

"Moody's expects that capital and retail funding will be rebuilt over time, and that risk-adjusted profitability will remain strong. These considerations are reflected in the decision to affirm ANZ's and ANZ NZ's ratings."

- NZPA