Johannesburg - Ratings agency Fitch
downgraded five South African banks on Tuesday in a widely
expected move, days after it cut the country's credit rating to
sub-investment grade.
The moves follow S&P Global Ratings, which also cut South
African foreign debt to "junk" status and then downgraded major
banks in the wake of a cabinet reshuffle that saw President
Jacob Zuma sack widely respected former Finance Minister Pravin
Gordhan.
Fitch said in a statement Absa Bank Limited,
FirstRand Bank Limited, Investec Bank Limited,
Nedbank Limited and Standard Bank had been
downgraded to 'BB+' from 'BBB-'.
"The deterioration in sovereign creditworthiness brings
increased risks to the banking sector. Higher borrowing costs
for the sovereign will translate into further pressure on
economic growth," Fitch said.
The ratings agency said this "is likely to result in
deterioration of banks' financial metrics, in particular, asset
quality, funding and liquidity, which is likely to have a
knock-on effect on profitability and capital".
Johannesburg's Banks Index has lost around 10
percent since March 27, when Zuma unexpectedly recalled Gordhan
from an international investor roadshow ahead of his sacking,
sparking calls for the president to resign or be removed from
the opposition, civil society groups, and key allies of the
ruling ANC.