Banking stocks rally in SA
JOHANNESBURG - Banking stocks rallied more than 4 percent on Tuesday after opening weaker following the South African Reserve Bank’s (SARB) published relief measures for the banking industry.
The banking index was 5.36 percent higher at noon to 5 488.28 points.
This was despite the fact that SARB on Monday advised banks to not distribute dividends and put bonuses for senior executives on hold amid the coronavirus outbreak.
Regulated entities are encouraged to assist customers with more empathy, flexibility and
Understanding, and are expected to consider business continuity plans to deal with Covid-19 and mitigate risks while ensuring that the banking system remains secure.
Nedbank was the biggest gainer as it rose 15.66 percent to R105.92 while Investec eased 0.34 percent to R55.80.
FirstRand was 2.95 percent higher to R39.84 while Standard bank went up 2.29 percent to R107.92.
Absa and Capitec also followed suit, rising 8.18 percent to R89.79 and 5.60 percent to R1 080.30.
SARB deputy governor Kuben Naidoo said in a statement yesterday that the Prudential Authority (PA) would implement relief measures to ease pressure on banks, including relaxing capital and liquidity requirements and rules on when restructured loans attract an additional capital charge.
“The PA is of the view that capital resources must continue to be available to support the real economy and to absorb losses in the immediate and medium to long term, and as such the PA expects that no distribution of dividends on ordinary shares and no payment of cash bonuses to executive officers and material risk takers should take place in 2020,” Naidoo said.
The PA’s recommendation comes after similar moves in the UK and the US last week.
Standard Bank said it would comply with the non-binding recommendations of the SARB.
“The board fully recognises the importance of dividends to the group’s owners,” the bank said in a statement.
“However, it also recognises the need to support households and businesses amid the Covid-19 pandemic and the importance of ensuring the stability of the group in the short, medium and long term.”