SARB assures investors: “The sky is not falling, relax”


It appears revered rating agencies are prone to downgrading institutions at the flimsiest of factors and that’s unfair for a country like South Africa, the South African Reserve Bank (SARB) has bemoaned.

In a statement, the central bank disputed grounds on which Moody’s Investor Service (Moody’s) based its decision to downgrade four of the country’s major commercial banks. “The South African banking sector remains healthy and robust,” it said.

Seeing a lower likelihood of support from the reserve bank to protect creditors after African Bank’s debt crisis, Moody’s downgraded Standard Bank, FirstRand, Absa and Nedbank and put them on review for further cuts.

SARB reasoned: “We do not agree with the rationale given in taking this step, nor do we agree with the assessment it is based on.”

“Once again, Moody’s refers to a lower likelihood of sovereign systemic support based on decisions taken recently in relation to African Bank Limited (African Bank),” it said, explaining that it supported commercial banks.

It is feared that the recent downgrades could impact on investor confidence which is already flagging as a result of uncertainty in the mining sector.

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