More banks set to move on debts

As investors started to recover from the double shock of profit warnings from National Australia Bank and ANZ over their huge sour-loan exposures, ratings agency Standard & Poor's yesterday flagged the prospect that the other big banks would also boost their charges.

But in a sign it didn't expect any immediate major rise in the amounts to be set aside, S&P indicated that the increases would be within the range of its forecasts.

The agency's statement came after it and rival agency Fitch threw their support behind ANZ's decision to raise its provisions for the 2008 financial year by a further $1.2 billion, taking the total charge to more than $2.1 billion.

Both agencies maintained ANZ's AA credit rating and suggested the bank had largely contained its bad debt problem.

But S&P has kept NAB's AA rating on negative credit watch amid concerns it may have to increase its provisions in the coming year after the specific $830 million write-down of last Friday.

The indications are that CBA and Westpac will take a tougher stance on sour loans, though not to the same extent as their rivals.

This is despite their respective exposures to debt-stricken companies such as Allco Finance and Centro Properties, whose future remains on a knife-edge as its new management team battles to repay billions of dollars of borrowings via asset sales.

Banking analysts at UBS have estimated CBA will push its provisioning levels close to $1billion when it announces its full-year profit of about $4.6billion next month.

UBS expects Westpac to have a bad debt charge of just under $900 million, although that may change because it still has two months of its financial year to run, against the back of a worsening economic outlook.

CBA shares rose $1.06 to $40.39 while Westpac shares rose 73 to $20.94.