Wellington, Oct 8 NZPA - The tax ruling that went against Westpac Banking Corp today will have no impact on its credit rating, Moody's Investors Service said.

The credit rating company affirmed the bank's Aa1 rating and said the outlook for the rating remained negative "due to ongoing asset quality and earnings pressures arising from the weakened operating environment".

"The tax ruling has no impact on Westpac's ratings because the bank has sufficient capital and earnings strength to absorb the full cost", said Patrick Winsbury, a senior vice president at Moody's Sydney office.

Westpac's Tier 1 ratio stood at 8.4 percent at March.

"Even if the bank provisioned the full potential cost, its Tier 1 capital ratio would decline by only 25 basis points, and would remain in line with expectations for the bank's current ratings," Mr Winsbury said.

Australian bank capital ratios are calculated more conservatively than in many other jurisdictions, he said.

Westpac lost a case in the High Court at Auckland today and as a result the Inland Revenue Department said it owned $961 million of back taxes.

It is considering appealing the decision.