17/09/2008 - 10:28

Credit rating cuts for BankWest parent

17/09/2008 - 10:28

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Credit ratings for BankWest parent HBOS have been downgraded in the wake of this week's US financial turmoil as analysts and investors grow increasingly nervous about the health of global financial institutions.

Credit ratings for BankWest parent HBOS have been downgraded in the wake of this week's US financial turmoil as analysts and investors grow increasingly nervous about the health of global financial institutions.

Reuters reported that ratings agency Standard & Poor's cut its long-term counterparty credit rating for HBOS to A+ from AA-, but said the outlook remains stable.

The agency said the ratings change reflected its view that "HBOS' financial profile is less well positioned to manage the deteriorating operating environment than 'AA'-rated global peers".

Another firm also cut its ratings for HBOS with Fitch Ratings decreasing its long-term issuer default ratings to AA from AA+.

The ratings cuts follows the collapse of US investment bank Lehman Brothers and the surprise sale of Merrill Lynch, while insurer American International Group Inc has been offered a $107 billion lifeline by the Federal Reserve.

According to a report on Business Spectator, arrears on HBOS' £35 billion of loans to businesses will increase while it may need to issue further write-downs on its £38 billion of asset-backed securities.

Meanwhile the company's share price has tumbled by 35 per cent in early morning trade today, dragging London's FTSE 100 leading shares index back into negative territory.

HBOS stock dived to 118 pence as investors continued to fret over the state of the global banking sector, despite news of a rescue package for troubled US insurer AIG.

The FTSE erased earlier gains to stand at 4,990.70 points, down 0.69 per cent from the close yesterday.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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