Moody’s warns South African banks over sovereign bonds
Moody's ratings agency on Wednesday warned South Africa's banks that
weak economic growth in tandem with their exposure to government
securities poses a risk of serious trouble ahead.
Describing the operating environment for South Africa's banks as
“challenging”, Moody's forecast modest economic growth of three percent
That, the agency said, was below the pace needed to kick-start
manufacturing, “tackle high unemployment and substantially improve
living standards,” putting a dampener on banks' business and eroding the
quality of assets.
Moody's warned that banks were over-exposed to government securities,
which were recently downgraded and which make up more than 150 percent
of capital at the largest banks.
Downgrading the outlook for the banking system to “negative” Moody's
also warned that banks were over reliant on deposits from other
institutions to maintain liquidity. AFP