Fitch Ratings on Aug. 2 acted on five South African banks and four holding companies, following the revision of the outlook on the country's long-term issuer default ratings to negative from stable.
The agency revised the outlooks on the long-term foreign- and local-currency issuer default ratings of Absa Bank Ltd., FirstRand Bank Ltd., Investec Bank Ltd., Nedbank Ltd. and Standard Bank of South Africa Ltd. to negative from stable and affirmed the issuer default ratings at BB+.
Fitch also affirmed the banks' B short-term foreign currency issuer default ratings, "bb+" viability ratings, BB+/B long- and short-term senior unsecured debt ratings. The agency also affirmed the AA(zaf) long-term national rating on the banks, with a stable outlook. The lenders' 3 support ratings and BB- support rating floors remain unaffected.
The rating agency also revised the outlooks on the long-term foreign- and local-currency issuer default ratings of bank holding companies Absa Group Ltd., Investec Ltd., Nedbank Group Ltd. and Standard Bank Group Ltd. to negative from stable and affirmed the issuer default ratings at BB+.
Moreover, the agency affirmed the holding companies' B short-term foreign currency issuer default ratings, "bb+" viability ratings, and AA(zaf) long-term national ratings, with a stable outlook. The firms' 5 support ratings and No Floor support rating floors remain unaffected.
The ratings reflect the agency's assessment that South African banks cannot be rated above the sovereign due to the concentration of their activities within the country. They also take into account the entities' significant exposure to government securities and lending to the public sector, the agency said.
Furthermore, Fitch considers the bank holding companies profiles to be closely aligned with their banking entities, due to which they also cannot be rated above South Africa's ratings.
The negative outlook reflects that a sovereign downgrade would likely be followed by a downgrade of the banks and holding companies' long-term issuer default ratings, the agency said.