[Weekly Wrap] Getting the chop

The mass ratings downgrade, which took the banks and their New Zealand subsidiaries down a notch from AA to AA-, is big news even though many other banks around the world faced similar downgrades after the ratings agency changed its methodology. It could force banks to borrow at higher interest rates.

An interesting aspect of S&P's assessment is its assumption of some form of 'support' for the banks from Aussie taxpayers if things turn south. Perhaps Australia should look at something similar to Reserve Bank of New Zealand's Open Bank Resolution policy before any further taxpayer 'support' is required.

Another financial entity feeling the sharp edge of a razor was Mercer, which has been replaced as asset consultant for AMP's multi-manager funds. AMP's choice of Towers Watson, which already works with AXA's ipac multi-manager funds, makes sense as it avoids unnecessary duplication.

Removing duplication was also a key factor in the recent changes at OnePath/ANZ Wealth, where a surgical scalpel has been taken to the investment team.  ANZ Wealth general manager Simon Botherway said there had been some overlap between OnePath's Auckland-based team and ANZ Wealth's Wellington-based team. And the frozen funds debacle had nothing to do with it.