A wake-up call for Australian banks

The recent S&P ratings downgrade may not pose a concern for our banks, but it does highlight the risks they face if they continue to play the housing game as they have previously.

In light of the savage downgrading by ratings agency Standard & Poor’s, are Australian banks really safe for depositors? While my answer to that question is an absolutely unqualified ‘yes’, I raise the question because just before the downgrading, I had a deep conversation with a top Australian banker about just how his bank would handle a global banking crisis.

The combination of that conversation and the Standard & Poor’s ratings downgrade made me realise that S&P is delivering to Australian banks a much needed wake-up call which bank CEOs ignore at their peril and to the peril of Australia.

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