Relief for ANZ as AA rating stays

In the meantime, the market's focus is beginning to switch to the two big banks that have yet to signal any additional provisions - Commonwealth, which is due to report expected profits of $4.6billion next month, and Westpac.

CBA's shares gave up $1.77 in a 4% fall to $39.33 while Westpac fell only 12 to $20.21.

Both Standard & Poor's and Fitch threw their support behind ANZ's move to dramatically increase its full-year provisions, even though analysts cut their forecasts for the bank's expected cash profits for the current financial year to as low as $3.09 billion.

The two agencies also said they did not expect ANZ to report anymore big increases in credit provisions over the last two months of its 2008 year.

Fitch said that ANZ's move to set aside just over 1% of its risk-weighted assets of $249 billion - equivalent to $2.7 billion - to cover possible write-offs was a "prudent" step in light of the deteriorating economic conditions in Australia and New Zealand.

Nonetheless, S&P indicated that although the bank's rating provided some extra room for further credit provisions if they were needed, its remaining buffer to absorb any additional deterioration of its loan book had been "significantly eroded".

Its credit standing, which helps underpin its ability to raise funds at cheaper rates, would come under pressure if the bank needed to put extra charges in place, the agency added.

Of the Big Four banks, ANZ now has the highest provisions in place. But the increase of $2.1 billion since the beginning of this calendar year will result in a 20-25% cut in its cash earnings per share when it reports its 2008 results in October.

Last week, when NAB increased its provisions for losses expected from US mortgage-linked securities, CBA sought to reassure the market of its position.

It said it had a $1.4 billion exposure to two "conduits" - US companies it sponsors - that were backed by "highly rated assets".

ANZ held its to 28 or 1.8% to $15.53 after the massive 11% decline on Monday.

NAB continued to suffer after its profit warning on Friday, falling another $1.02 or 3.9% to $24.78.

NAB did not fare as well from Standard & Poor's, after the bank boosted its provisions last week, with the agency downgrading its outlook on NAB to negative from stable.