Ratings agency Standard & Poor's sketched out some of the capital-raising prospects of several regional and niche banks in the course of publishing revised ratings on five more Australian banks, three in New Zealand and one in Papua New Guinea.
Yesterday's update to selected bank ratings follows the release of updated ratings for the major banks by S&P last week, which cut their ratings by one notch.
In this new batch there is one upgrade and one demotion, while three ratings are left unchanged among the Australian banks in the cohort. Eight ADI ratings remain to be updated - those covering building societies and credit unions.
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Bendigo and Adelaide Bank finally received the upgrade to its credit rating that has been probable since the middle of the year. S&P now rates the bank's long-term debt at A-, up from BBB+ previously.
Moody's already rates the debt of Bendigo at A2 on its scale, while Fitch Ratings moved the bank's long-term rating to A+ on its scale back in May.
S&P wrote that the rating upgrade was "underpinned by our expectation that the bank will increase its risk-adjusted capital ratio to above 10 per cent in the next 12 months."
It also wrote that Bendigo was expected to redeem or convert preference shares at the next reset date, on November 1, 2012.
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Bank of Queensland had its rating cut to BBB from BBB+. S&P said it assessed BOQ's "earnings capacity… as being below the industry average, largely as a result of BOQ's weaker asset quality", which is hampered by a small number of large, non-performing commercial property loans, as well as borrower stress across the remainder of its loans.
S&P said it views BOQ's business position as "moderate, [this is] heavily based on our views on the strength of the Australian major banks and their ability to negatively impact the business position of other market participants like BOQ."
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Suncorp Metway had its rating affirmed at A+. S&P said it expected Suncorp to aim for a higher risk-adjusted capital ratio than its present level of 10 per cent and implied that it expected "supportive capital management policies".
S&P said Suncorp made above-average use of hybrid capital and said "the quality of capital could improve over the medium term should hybrid capital convert to common equity in 2013."
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ME Bank had its rating affirmed at BBB. In its review, S&P noted the concentration in its business model on home loans, its need to develop a more sizeable deposit base and changes in operating model and management, as well as forthcoming investment in new systems.
In addition to revised ratings in Australia and New Zealand, S&P also updated ratings for a number of Asian banks.
Consistent with the earlier phases of this exercise, a number of banks in China received ratings upgrades.