Ratings agency Fitch downgraded five South African banks inside a widely expected move, days after it cut the country’s consumer credit rating to sub-investment grade.
The moves follow S&P Global Ratings, which also cut South African foreign debt to “junk” status and downgraded major banks during the wake on the cabinet reshuffle that saw President Jacob Zuma sack widely respected former Finance Minister Pravin Gordhan.
Fitch said in a very statement Absa Bank Limited, FirstRand Bank Limited, Investec Bank Limited, Nedbank Limited and Standard Bank has been downgraded to ‘BB+’ from ‘BBB-‘.
“The deterioration in sovereign creditworthiness brings increased risks on the banking sector. Higher borrowing costs for your sovereign will produce further pressure on economic growth,” Fitch said.
The ratings agency said this “is probably going to trigger deterioration of banks’ financial metrics, specially, asset quality, funding and liquidity, which happens to be prone to possess a knock-on effects on profitability and capital”.
Johannesburg’s Banks Index has lost around Ten percent since March 27, when Zuma unexpectedly recalled Gordhan from a world investor roadshow ahead of his sacking, sparking requires obama to resign or why not be taken away from the opposition, civil society groups, and key allies on the ruling ANC.
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