SA Banking Quadriga gets downgraded by Fitch, Investec escaped

Fitch rating agency has finally downgraded South Africa’s Banking Quadriga, while one bank was surprisingly 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 rightfully 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, and it comes as a surprise how they could have disguised their lending practice and holdings so cleverly that 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.”

Well done Investec, a massive Christmas Stocking you pulled over their eye……..

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