It’s not yet the sovereign downgrade, but it’s the pre-downgrade downgrade, from S&P:
• In the past two years, information has emerged on the Australian banking system that highlights lapses in governance and risk management. As a result, we are revising our previous view on the competitive dynamics and institutional framework of the Australian banking industry. Nevertheless, we remain of the view that the competitive dynamics and institutional framework of the Australian banking industry remain low risk by global standards.
• At the same time, we now consider that the trend for economic risks faced by the Australian banks has turned positive. We believe that the ongoing orderly unwinding of imbalances–which were built up on the back of several years of strong growth in house prices and private debt–is likely to continue.
