ANZ NZ Outlook Shifts to Positive Amid LAC Hopes

Fitch Ratings has upgraded ANZ Bank New Zealand's outlook to Positive from Stable, but its A+ long-term issuer rating remains unchanged. This development is seen as a potential future upgrade rather than an immediate change in credit grade.

The upgrade path depends on the implementation of loss-absorbing capacity (LAC) instruments by the subsidiary, which Fitch expects to become permissible around late 2028. LAC allows eligible debt to be written down or converted into equity during a bank failure, absorbing losses before ordinary senior creditors.

Fitch currently anchors its assessment of parental support to ANZ's viability rating due to uncertainty over whether New Zealand senior creditors would benefit from the parent's resolution-debt buffer if the subsidiary failed. Once LAC is implemented, Fitch expects to anchor the support assessment to ANZ's higher long-term issuer rating instead.

The decision path runs through 2029, with key milestones including submissions closing on the Reserve Bank of New Zealand's crisis-preparedness consultation and the RBNZ issuing crisis-preparedness standards. The central bank aims for an orderly bank resolution that preserves critical services without public money.