Could Eskom cause a banking crisis? That is the unspoken question that lies behind the new "co-operation" between the government and the financial sector on a rescue plan for state-owned companies. The problem is twofold. Companies such as Denel, South African Airways, South African Express and the Trans Caledon Tunnel Authority face immediate liquidity problems and cannot pay salaries and suppliers. They need cash, and banks have not yet agreed to give it to them. The second problem is bigger, in fact it is huge. It is Eskom and its R367bn (and still growing) mountain of debt. This debt, mostly in bonds, is not held in any significant way by banks. Asset managers are more exposed, with the Public Investment Corporation holding R80bn in Eskom debt alone. But these amounts are not so big that they could cause a banking crisis in themselves. The problem would arise if Eskom defaulted on its obligations. This might not necessarily mean the failure to repay a lender, but could also incl...

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