Reserve Bank tightens screws over banks

The Reserve Bank is bolstering its oversight over lenders’ operations in other African countries to ensure they adequately mitigate risk as they expand across the continent. “South African banks have an increasing appetite for African markets,” Reserve Bank deputy governor Lesetja Kganyago said yesterday. “We have now decided to enhance our consolidated supervision and oversight of the banks’ cross-border operations.” South Africa’s banking industry is dominated by Standard Bank Group, Nedbank Group, FirstRand and Absa Group, which together have an 84 percent share of the market, according to the central bank’s March Financial Stability Review. The lenders have 31 units, branches or offices in other African countries. Supervision of lenders’ cross-border activities had relied on an annual inspection of their balance sheets, and rigorous processes were needed to identify possible risks, Kganyago said. – Bloomberg

Rotation out of bonds under way

The great rotation out of bonds into equities could be under way, according to the BofA Merrill Lynch Fund Manager Survey. “Asset allocators have, for the fifth successive month, increased allocation to equities while reducing bond positions,” BofA Merrill Lynch said yesterday. “A net 35 percent are overweight equities, compared with a net 25 percent in October. A net 35 percent of asset allocators are underweight bonds, up from a net 26 percent a month ago.” More investors are expecting higher interest rates as inflation expectations inch upwards. The trend explains the recent shift in domestic portfolio allocation by non-residents. – Ethel Hazelhurst

State of economy a major concern

The state of the economy has become a major concern among South Africans as a result of ongoing labour unrest, crime, debt, job security and increasing food prices, according to the Nielsen third-quarter consumer confidence survey released yesterday. This was a continuing trend from the first quarter of this year and was not unique to South Africa. Globally, the economy and job security remained top concerns. The study also revealed that local online consumer confidence rose by one point to 78 in quarter three. – Nompumelelo Magwaza