E&Y: Crisis to stem brain drain

Johannesburg - Fewer global opportunities as a result of the credit crisis could see emigration subside from South Africa, according to a report on the credit crisis by Ernst & Young on Monday.

Director of Assurance, Emilio Pera, says that managing talent has always been critical in South Africa and so this issue will not be as critical as it will become for global markets.

"The SA market is reasonably well prepared," said Pera.

He adds that the credit crisis is not as severe locally as banks haven't suffered from reductions in capital to the extent that the Western economies have, while there are also fewer banks locally, making the situation more manageable.

Regulation and compliance is not in as great a need of change as a lot of this - like the National Credit Act - had already been implemented.

However he concludes: "We are facing significant challenges in a tough environment."

The research shows that by February 2009, FirstRand's market capitalisation had fallen from R127.4bn before the credit crisis to R77bn and Absa went from R88.8bn to R66bn. Investec went from R19.72bn to R9.46bn in February, while Nedbank dropped from R60.7bn to R39.9bn. Standard Bank was down from R134.7bn to R112bn.

Among insurers, Sanlam was shown to have dropped from R52.41bn to R34.63bn and Liberty from R24.71bn to R19.02bn.

Among asset managers, Coronation dropped from R3.05bn to a recent R1.34bn.

But these performances pale when compared with global companies, where Citigroup has fallen from $255bn before the crisis to a recent $19bn. Barclays - owners of Absa - went from $91bn to $7.4bn and Deutsche Bank from $76bn to a recent $10.3bn.

Among global insurers, AIG is a mere blip at $4bn from a whopping $99bn pre-crisis. Allianz has fallen from $51bn to $36bn and Prudential from $20bn to $10bn.

- I-Net Bridge