JOHANNESBURG Aug 19 Ratings agency Moody's
downgraded four South African banks on Tuesday and put them on
review for further cuts, saying there was a lower likelihood of
support from the central bank to protect creditors after African
Bank's debt crisis.
Moody's cut by a notch the long term local currency deposit
ratings for Standard Bank of South Africa, FirstRand
, Nedbank and Absa Bank, the local operation
for Barclays Group Africa.
The news was released after the stock market close.
The ratings agency said it was adjusting its view following
the $1.6 billion bailout of African Bank by the South
African Reserve Bank (SARB).
Moody's said while SARB's actions mitigated the risk of
contagion across the banking sector, the regulator had indicated
by its actions that it was willing to impose losses on
"The one notch downgrade ... reflects Moody's view of the
lower likelihood of systemic support from South African
authorities to fully protect creditors in the event of need,"
the ratings agency said in a statement.
The ratings change comes days after a downgrade of smaller
lender Capitec, which had been prompted by the bailout
for unsecured lender African Bank.
SARB said at the time that it disputed the downgrade of
Capitec because the lender had a different model to African
Bank. The regulator did not immediately respond to requests for
comment on the latest downgrade.
Some analysts believe the latest wave of downgrades may be
"One bank with a highly flawed business model went into
curatorship, and now we see a possible overreaction, with a
downgrade to every other major bank in South Africa," said Razia
Khan, Head of Africa Research at Standard Chartered.
"The South African banking system remains (on the whole) one
of the best-regulated globally," Khan added.
Moody's also downgraded long term national scale deposit
ratings for the four lenders and placed foreign-currency ratings
for the four and smaller lender Investec on review.
(Reporting by Helen Nyambura-Mwaura and Xola Potelwa; Editing
by Joe Brock)