AMP and its subsidiaries have been placed on a “negative credit watch” by S&P Global Ratings as the group separates from its life insurance businesses.

The bank’s creditworthiness will be several notches lower after the sale of its life business, the ratings agency says. While AMP remains well capitalised, its modest contribution to earnings is unlikely to bolster creditworthiness.

Competitive pressure on AMP Life and uncertainty around its strategy and capital adequacy have weakened its credit profile. Its rating will also be affected by S&P’s assessment of Resolution Life.

The legal separation should be completed by later this year.