A potential credit rating downgrade on AMP from Standard & Poors adds to the mounting woes of the scandal-hit wealth manager and its shareholders.
S&P has placed AMP on a so-called ‘creditwatch’ with negative implications as it assesses the damage to AMP’s brand and the risk posed to its business by revelations at the financial services royal commission that AMP charged fees for financial advice that was never delivered and lied to the corporate regulator.
S&P on Wednesday said it believes AMP’s competitive position could be at risk from the revelations that have damaged its brand and reputation.
The ratings giant said a downgrade – which would affect AMP’s borrowing costs – could result from a loss of major customers or increased risk of penalties, fines or legal action.
AMP shares have fallen by 13 per cent, wiping almost $1.8 billion from its market value, since its behaviour was exposed at the commission.
Chairman Catherine Brenner resigned on Monday, following CEO Craig Meller out the door, and the company is also potentially facing multiple class actions on behalf of investors who have lost money on the stock.
AMP will remain on creditwatch for about three months while S&P assesses the impact of the commission revelations.