Moody’s reviews five biggest South African banks

Moody's Investors Service said it placed the Baa2 long-term deposit and senior debt ratings of the five largest South African banks on review for downgrade: Standard Bank of South Africa Ltd., FirstRand Bank Ltd., ABSA Bank Ltd., Nedbank Ltd. and Investec Bank Ltd.

The agency also placed Standard Bank Group's Baa3 issuer rating on review for downgrade.

Moody’s said the action is driven primarily by (a) The increasing risk of a weakening credit profile of the South African government, as captured by Moody's decision to place on review for downgrade South Africa's sovereign rating (Baa2) on March 8 as the banks' sizable holdings of sovereign debt securities link their creditworthiness to that of the national government; and to a lesser extent, by (b) the challenges these banks face in view of weaker economic growth in South Africa, particularly in the context of reduced commodity prices, consumer affordability pressures, high consumer indebtedness and increasing interest rates that will likely lead to elevated loan impairments.

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