Moody’s reviews largest South African banks

Moody's Investors Service said it placed the Baa2 long-term local- and foreign-currency deposit 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 Ltd.’s Baa3 issuer rating on review for downgrade.

Moody’s said the action was driven primarily by: (a) Potential weakening of the South African government's credit profile, in particular in the country's institutional, economic and fiscal strengths, as captured by the agency’s recent decision to place South Africa's Baa2 government bond ratings on review for downgrade. The banks' sizable holdings of sovereign debt securities inevitably link their creditworthiness to that of the national government; and to a lesser extent, by (2) the challenges these banks face in view of weak economic growth in South Africa and the protracted political tensions, which are likely to induce fragile investor confidence, asset price volatility and increased funding costs.

These factors are likely to put pressure on their operating income and resilient performance so far, the agency explained.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.