Standard & Poor’s has lowered the credit ratings of the embattled AMP group of companies, including its banking arm.
In a statement issued late Monday evening, the ratings agency said it had reduced long term ratings of each AMP entity by one notch, after concluding that recent instability within the group had weakened creditworthiness.
Following the downgrades, the long term rating of AMP Bank Ltd have been lowered to BBB from BBB+, while the corresponding ratings for AMP Limited and AMP Group Holdings have slipped to BBB- from BBB.
“The AMP group faces increased risks of disruption to its strategic direction and its ability to effectively execute its strategy,” S&P said.
“In our view, these challenges weaken the overall creditworthiness of the group.”
AMP’s new chair Debra Hazelton last week announced that her board was conducting a review of the group’s assets after receiving approaches from potential buyers.
While that announcement has resulted in a strengthening of AMP’s share price in recent days, S&P believes that it could impede the operating performance of the group.
“In our view, uncertainty hangs over the strategic course that has been set for the various business units,” the ratings agency said.
S&P also cited recent board and management departures as likely to weaken operational effectiveness.
“In our view, the departures could undermine the operational effectiveness of the group's business operations, lead to business outflows, and may expose the group to key management reliance,” S&P said.
“In summary, these issues could provide impediments to the group's future operating performance.
“Strong governance and management leadership is key to achieving a solid strategic turnaround especially in the current environment.”