Suncorp Metway Ltd has been placed on creditwatch by Standard & Poor's Ratings Services amid talks of a possible asset break-up of the group and uncertainty over its future corporate structure.
Creditwatch means Suncorp's A+/a-1 rating orating could be upgraded, downgraded or remain unchanged depending on the results of possible takeover negotiations mooted today.
Suncorp today confirmed market speculation that it is in talks with parties over the potential sale of its banking and wealth management operations.
Commonwealth Bank of Australia is widely regarded by the market as the most likely buyer.
Suncorp's banking and wealth management divisions contribute over 40 per cent of its group earnings, according to S&P.
Suncorp has a shorter-term funding profile than its peers, so if the assets were to be sold to an institution rated above A+, the final credit profile of those assets would likely improve, S&P said.
Conversely, an acquisition by a lower-rated entity would cause the final credit profile of these assets to deteriorate, the agency said.
S&P's credit analyst Mark Legge said funding for Australian banks had become more challenging in recent weeks, with the closure of offshore credit markets.
"This scenario, in particular, adversely affects those banks with shorter-term liability profiles and those more exposed to offshore funding markets," he said.
Suncorp has sound asset quality and earnings profiles, S&P said.
By 1331 AEST Suncorp's shares were 4.12 per cent higher at $11.12 and remained the only financial services stock to rise amid broad-based market weakness.
SUN Price at posting:
$10.62 Sentiment: None Disclosure: Not Held
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