Moody's cuts five South Africa banks

Moody's Investors Service said it downgraded the bank financial strength ratings of five South African banks, including Standard Bank of South Africa Ltd., Absa Bank Ltd., FirstRand Bank Ltd., Nedbank Ltd. and Investec Bank Ltd. The downgrades also have triggered downgrades in the global local-currency deposit and debt ratings of four of the banks, with the exception of Investec Bank Ltd.

The outlook is stable.

Standard Bank of South Africa's bank financial strength rating was changed to C from C+ and its long-term global local-currency deposit rating to A1 from Aa3.

Absa Bank's bank financial strength rating was downgraded to C- from C, long-term global local-currency to A1 from Aa3 and its national scare rating was affirmed at Aa1.za and its euro-medium term note program was affirmed at A1. The outlook on its A2-rated subordinated and junior subordinated notes was changed to stable from negative. The rating on its tier 1/hybrids instruments was changed to A3 from A2.

FirstRand Bank's bank financial strength rating was downgraded to C- from C, long-term global local-currency deposit rating to A2 from A1 and national scare rating to Aa2.za from Aa1.za. Its euro-medium term note program's senior unsecured debt was downgraded to A2 from A1 and subordinated notes to A3 from A2. The bank's local-currency and national scale debt ratings were downgraded with senior debt to A2/Aa2.za from A1/Aa1.za, subordinated and junior subordinated debt to A3/Aa3.za from A2/Aa2.za, and tier 1/hybrids instruments to Baa1/A1.za from A3/Aa3.za.

Nedbank's bank financial strength rating was downgraded to C- from C, long-term global local-currency deposit rating to A2 from A1, national scale rating to Aa2.za from Aa1.za. Its euro-medium term note program's foreign-currency rating for senior unsecured debt was downgraded to A2 from A1 and the subordinated notes to A3 from A2. The bank's national scale debt rating for senior unsecured debt was downgraded to Aa2.za from Aa1.za; subordinated notes downgraded to Aa3.za from Aa2.za; and tier 1/hybrids instruments to A1.za from Aa3.za.

Investec Bank's bank financial strength rating was downgraded to C- from C and the outlook on its long-term global local-currency deposit rating change to stable from negative. Its euro-medium term note program's outlook on the bank's senior and subordinated foreign-currency debt ratings was changed to stable from negative and its national scale debt ratings remain unchanged.

These actions reflect the impact of deteriorating operating and macro conditions on the banks' financial fundamentals, Moody's said.

The new ratings better capture the ensuing slowdown in business growth, more challenging funding conditions and overall future prospects for the banks, the agency said.

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