S&P has put AMP on watch following 'damage' from the banking royal commission

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S&P Global Ratings has placed AMP on CreditWatch with negative implications following admissions in the financial services royal commission which “damaged its brand and reputation”.

The agency says disclosures by AMP raise questions over management and governance.

AMP’s CEO and chair resigned following admissions in the commission that it made false or misleading statements to the corporate regulator over the fee for no service issue.

“The CreditWatch placement reflects our view of risks to AMP’s creditworthiness following fallout from recent disclosures that has damaged its brand and reputation, raised questions over management and governance, and seen key management and its board chair depart the group,” says S&P.

“We believe that the group’s prospective competitive position may be at risk of weakening following the damage to its brand and reputation.

“AMP’s otherwise very strong business and financial position, including very strong capitalization and improving earnings profile, have averted any immediate lowering of its credit ratings ahead of our further review under this CreditWatch action.”

S&P says it will resolve the CreditWatch when it gains greater clarity.

“A downgrade could be triggered by indications of flow on to core business segments, for instance by a material weakening in asset
management flows caused by a loss of major customer mandates or heightened potential for material penalties, fines, or legal action,” the agency says.

“We believe any downgrade would likely be limited to one notch and anticipate resolving the CreditWatch in around three months.”

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