File picture: Chris Ratcliffe/Bloomberg
File picture: Chris Ratcliffe/Bloomberg

Fitch downgrades SA banks

By Reuters Time of article published Apr 11, 2017

Share this article:

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. 

Reuters

Share this article:

Related Articles