Fitch downgrades 4 South African banks

Fitch rating agency has downgraded four of South Africa's big banks, while one bank was upgraded.

"Fitch Ratings has downgraded the Long-term foreign and local currency Issuer Default Ratings (IDR) of FirstRand Bank Limited (FirstRand), Nedbank Limited (Nedbank) and The Standard Bank of South Africa Limited (SBSA) and the respective rated holding companies of the last two banks", it said in a statement on Friday.

The banks have been downgraded from triple B status to triple B-minus status.

According to Fitch the rating actions were driven primarily by banks' concentration to South Africa, large holdings of government securities, high exposure to sovereign-owned enterprises and the weakening economic and operating environment, as indicated by the sovereign downgrade.

"Fitch has also downgraded Absa Bank Limited's (Absa Bank) and Barclays Africa Group Limited's (BAGL) Long-term foreign and local currency IDRs to 'BBB' and 'BBB+', respectively from 'A-', as a result of South Africa's Country Ceiling being revised to 'BBB'."

However, Investec Bank Limited (Investec Bank) and Investec Limited's (Investec) IDRs and VRs have been affirmed at 'BBB-' and 'bbb-'.

"Their National Ratings have been upgraded as Fitch believes that their creditworthiness relative to other credits in the country has improved in the downturn owing to a more resilient risk profile."

The rating actions follows Fitch's downgrading of South Africa's debt to one notch above junk status, citing the slowing economy and rising debt. It assigned a stable outlook to the rating.

Source: Fin24