The financial services sector has had to bear the sins of the father once again, with Moody’s slashing the ratings of SA’s five largest banks and four insurance companies one notch on Monday night to bring them in line with the country’s sovereign rating. In the latest round of downgrades, the ratings agency cut SA’s foreign currency debt to just one notch above junk with a negative outlook, signalling that it could cut the rating further when it is reviewed in a few months’ time. As rated companies move in lockstep with government’s ratings, Moody’s followed this action with ratings cuts to Standard Bank, FirstRand, Absa, Nedbank and Investec’s long-term and short-term foreign currency deposit ratings. Moody’s said it expected sub-zero GDP growth this year, significantly below the government’s targets. “These challenging economic conditions, combined with potentially weaker investor confidence, volatility in asset prices, and higher funding costs, will likely pressure banks’ earnin...
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