Fitch switches CBA rating
A major agency has downgraded Commonwealth Bank’s outlook.
Fitch has kept CBA’s default rating but revised its outlook for the company from ‘stable’ to ‘negative’ due to the bank’s “risks in remediating shortcomings” in governance.
It comes after the Australian Prudential Regulation Authority (APRA) released a report criticising CBA’s board, management and company culture for being complacent, insular and blinded to risks.
APRA has imposed a new requirement on CBA to have an extra $1 billion in regulatory capital alongside its report’s 35 recommendations.
Fitch says CBA management may struggle to keep its focus on ongoing operations amid a string of inquiries into the sector.
“If this occurs, it may leave CBA more susceptible than peers to a weaker operating environment,” a statement from Fitch Ratings said.
Fitch said shortcomings in CBA’s risk appetite, management and strategy are “more widespread” than previous assessments had shown.