Moody's cuts Suncorp-Metway to A1

Moody's Investors Service said it downgraded the long-term deposit and debt ratings of Suncorp-Metway Ltd. to A1 with a stable outlook, from Aa3. The bank financial strength rating was downgraded to C+ with a negative outlook, from B-. Its short-term ratings of prime-1 were confirmed, along with the existing Aa3 insurance financial strength rating of Vero Insurance Ltd. and the A1 insurer financial strength rating of Suncorp-Metway Insurance Ltd., but the outlook is negative.

The Aaa ratings of the bank's government-guaranteed obligations were not affected and their outlook remains stable.

The downgrade of the company's deposit and debt ratings reflects the impact of the deepening global economic downturn on the bank's asset quality and earnings, Moody's said.

The deposit and debt ratings are now supported at the A1 level by the strong support the Australian government is extending to the banking system, the agency said, and this is reflected in the stable outlook.

The bank financial strength rating continues to carry a negative outlook, in line with the broader banking system, the agency added. This reflects the continuing stresses on the bank and the higher frequency of catastrophic losses currently weighing on the insurance arm's results, Moody's said.

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