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Johannesburg - Ratings agency Moody’s announced on Thursday
that it has downgraded SA’s five biggest banks’ foreign deposit ratings due to
the revision of the country's foreign currency deposit ceiling to Baa1 from A3
previously.
“Today's rating actions were prompted by the weakening of
the South African government's credit profile‚ as captured by Moody's downgrade
of SA's government bond rating to Baa1 (negative) from A3 on 27 September 2012;
and the high sovereign exposure of the five largest South African banks‚”
Moody’s said in a statement on Thursday.
Standard Bank Group [JSE:SBK]‚ Absa Group [JSE:ASA]‚ FirstRand [JSE:FSR]‚
Nedbank Group [JSE:NED] and Investec [JSE:INL] foreign-currency deposit now stands
at Baa1 from its previously held A3 rating.
“All five aforementioned banks‚ in addition to African Bank
Limited‚ carry negative outlooks on their local-currency deposit and debt
ratings‚ in line with the sovereign rating outlook‚” the agency said.
Moody’s said that any indication of a weakening of the SA authorities'
willingness to support any of the above-mentioned banks or any significant
deterioration in their capacity to extend financial support‚ could negatively
affect the banks' deposit and debt ratings.
“A possible deterioration in the banks' financial
performance could also trigger a rating downgrade of both their standalone and
deposit ratings‚” the agency said.
It added that there is little likelihood of any upwards rating momentum over the next 12 months. “Moody's believes that systemic support for the banks covered by today's announcement will not increase during this timeframe and that the banks' standalone credit assessments are unlikely to strengthen sufficiently in the currently challenging economic environment to generate upwards ratings pressure‚” Moody’s said.
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