The Banking Association of South Africa's (Bassa) Cas Coovadia says the ripple effect of a sovereign credit ratings downgrade on the country’s banks is expected and should not be a cause for worry.
On Tuesday Standard & Poor’s (S&P) Global announced the country’s sovereign credit rating has been downgraded to BB+.
The agency has confirmed its also downgraded South Africa’s banks to non-investment grade.
Coovadia says the institutions have enough capital to handle a the event.
Our banks are well capitalised. We are the second most sound banking sector in the world.— Cas Coovadia, MD of the Banking Association of South Africa
Banks being downgraded is expected because the banks don’t have a higher rating than their sovereign, so when the sovereign is downgraded the banks will get downgraded.— Cas Coovadia, MD of the Banking Association of South Africa
It is not a reflection on the soundness of the banks, it’s not a reflection on the capitalisation of the banks, our banks will manage this. It’s more a reflection on political stability and policy stability on the country at the moment.— Cas Coovadia, MD of the Banking Association of South Africa
He admits however that interest rates could go up and in turn affect the cost of services at your bank.
Click on the link below to listen to the full interview...
This article first appeared on 702 : Clients do not have to worry about banks downgrade - Cas Coovadia