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