S&P downgrades big four Aussie banks

Following a change to its ratings methodology, S&P has lowered the long-term ratings of Westpac, National Australia Bank, ANZ and the Commonwealth Bank of Australia by one notch from AA to AA- with stable outlooks.

Their New Zealand arms Westpac New Zealand, BNZ (NAB), ASB (CBA) and ANZ National and UDC Finance (ANZ) were also cut from AA to AA-.

In its reports on the four "pillars" of the Australian and New Zealand banking system, S&P noted the banks' reliance on offshore funding but said the overall risks were low, due to their market dominance and the relatively strong economy in Australia.

However, S&P also appears to be banking on a bailout if things go horribly wrong for the big four.