Moody’s Downgrades South African Banks

Shares in South Africa’s largest banks fell on Wednesday, following downgrades from the ratings agency Moody’s.

Standard Bank, FNB, Nedbank and ABSA, which is owned by Barclays, were all downgraded on Tuesday and Moody’s warned of more possible ratings cuts.

The move comes a week after South Africa’s central bank bailed out the smaller lender African Bank.

The South African Reserve Bank insisted the country’s banking sector remained “healthy and robust.”

Analysts said the downgrade was in response to what Moody’s views as the risks of unsecured lending, or loans not based on collateral.

Chris Hart of Investment Solutions said: “The downgrade is in response to the deteriorating credit quality that we are seeing in unsecured lending space, the collapse of the African Bank is indicative of that.”

Moody’s reduced its ratings on the four big banks by one notch to Baa1.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza