Australia's largest banks have been dealt a serious double blow. On the back of the new government tax levy, credit agency Moody's have issued a credit rating downgrade.
Credit rating agency Moody's Investors Service has downgraded 12 Australian banks, including the big four of ANZ, Westpac, National Australia Bank and Commonwealth Bank.
Moody's said elevated risks within the household sector heighten the sensitivity of Australian banks' credit profiles to an adverse shock.
Bank Levy a Reality
The downgrade suggests bank funding will be slightly more expensive when raising money overseas, a factor that has forced higher independent interest rate increases in the past.
The government's levy on Australia's five biggest banks, the big four plus Macquarie, is now a reality with the legislation clearing federal parliament in a late session on Monday.
The levy, announced in the May budget, will apply from July 1 and is expected to raise $1.6 billion in the first year.
