By Paulina Duran
SYDNEY, Sept 7 (Reuters) – Ratings agency S&P Global downgraded by a notch on Monday the credit rating of Australian financial planning giant AMP Ltd AMP.AX, to ‘BBB-minus’, moving it closer to “junk” status, citing challenges to its strategic direction.
The agency said AMP, which announced last week that it was considering a sale of its assets, was exposed to challenges that could disrupt its strategic direction, while its governance standards were weaker than previously thought.
“In our view, uncertainty hangs over the strategic course that has been set for the various business units,” S&P said in an emailed statement.
The BBB-minus credit rating is the last “investment” grade, with bonds rated below that considered highly speculative, or “junk”, by the agency.
S&P added that the departure of some senior executives and board members from parts of the group had fed into its decision.
AMP acknowledged the downgrade, saying in a statement to the stock exchange that it continued to have “a strong balance sheet and capital position”.
AMP’s reputation has plummeted after a public inquiry into the financial sector exposed systemic wrongdoing such as the charging of fees for no services, prompting the exit of its chairwoman and chief executive in 2018.
It has failed to allay fears triggered by those scandals, and only last week lost another chairman over its handling of an employee misconduct complaint.
“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,” the ratings agency said.
The long term ratings of banking unit AMP Bank were also downgraded to ‘BBB’ from ‘BBB-plus’, S&P said.
(Reporting by Paulina Duran in Sydney; Editing by Jan Harvey and Clarence Fernandez)
((firstname.lastname@example.org; +61 2 9171 7406;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.