Standard and Poor’s, which earlier today placed Australia’s AAA rating under negative watch, followed with the same action on the big four banks.

“The outlook revisions of the bank ratings reflect our view of a potential reduction in Australia’s capacity to support systemically important banks,” Standard and Poor’s says.

The move to a negative from stable outlook was expected because a rating agency doesn’t usually give a company a higher rating than the sovereign score.

This is especially so because of the perceived support of the banks by the government.

“The negative outlooks on these banks (Commonwealth, Westpac, ANZ and NAB) reflect our view that the ratings benefit from government support and that we would expect to downgrade these entities if we lower the long-term local currency sovereign credit rating on Australia,” the ratings agency said in a statement after the close of trading the ASX.

At the same time, S&P affirmed the AA- long-term and A-1+ short-term issuer credit ratings on each of the banks.

“We could revise the outlook on these entities back to stable if we revise the outlook on Australia’s AAA local currency sovereign credit rating back to stable,” Standard and Poor’s says.

The stable outlooks on Macquarie Bank and Cuscal Ltd are unaffected by the sovereign action.

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