The Johannesburg Stock Exchange in Sandton.
Johannesburg - South African banking stocks came under pressure on Friday, with the banks index plummeting 6.14 percent in the aftermath of the shocking sacking of former Finance Minister Pravin Gordhan and his deputy, Mcebisi Jonas.

After almost a week of heightened speculation, President Jacob Zuma early on Friday made sweeping changes to his cabinet, replacing Gordhan and Jonas with Home Affairs Minister Malusi Gigaba and ANC MP Sfiso Buthelezi as his deputy.

Nedbank Group fell 7.35 percent to R241.50, while Barclays Africa lost 7.16 percent to R139.51. Standard Bank and FirstRand were down 6.47 percent and 5.62 percent to R143.75 and R46.36 respectively.

On Friday, Standard Bank chief executives Sim Tshabalala and Ben Kruger described the changes as significant. Both said they regretted Zuma’s decision to sack Gordhan and Jonas.

“We do not dispute the absolute prerogative of the President to appoint and dismiss ministers as he sees fit but, on the publicly available information, we do not believe this was a well-considered or constructive decision. Its effects have already weighed heavily on commercial sentiment, as evidenced by marked weakness in the domestic stock, bond and rand markets,” they said.

Read also: Assets tumble on Gordhan sacking

Banking Association of South Africa managing director Cas Coovadia said Zuma’s actions had put South Africa into turmoil. He said the reshuffle was not in the best interests of South Africa. He questioned its motive.

Dire loss

“The specific change in both Finance Minister and Deputy Finance Minister creates a dire loss of institutional knowledge and raises legitimate and alarming concerns regarding issues of fiscal discipline and protection of institutions. The Banking Association South Africa has previously voiced its deep concerns regarding the actions of the President. These have unfortunately fallen on deaf ears,” said Coovadia.

Also on Friday the rand continued its downward spiral, trading at R13.4072 by 5pm.

On Thursday, the rand tumbled more than 5 percent, shedding nearly 50 cents to the US dollar as news that Gordhan and Mcebisi would be fired became more certain.

RMB currency strategist John Cairns said he was surprised that the rand has not weakened further. “The bias of risks is that the reaction has just been delayed. We now expect South Africa to be downgraded - by Moody’s next week and eventually by S&P and Fitch,” he said.

Novare’s Actuaries & Consultants economic strategist Tumisho Grater said that the rand’s reaction to the changes had not been as aggressive as previously expected.