BANKERS yesterday shrugged off Moody's Investors Service's decision to downgrade by one notch the senior debt and deposit ratings of SA's five big banks, saying the only effect could be higher costs of borrowing offshore.

Moody's gave SA's credit ratings a negative outlook last year, although South African banks are among the most heavily capitalised in the world.

Affected are Standard Bank, Absa, FirstRand, Nedbank and Investec. Their shares hardly reacted yesterday.

"The downgrades reflect the impact of the country's increasingly constrained public finances and Moody's view that authorities would face challenging policy choices if multiple institutions were to need its financial support at the same time," Moody's said yesterday. The action was not linked to a deterioration in financial strength or performance, it said.

Investec economist Annabel Bishop said yesterday she did not believe the downgrade was "fully justified".

Nedbank CEO Mike Brown said Moody's had included South African banks in its global review, which incorporated countries' systemic support ratings into bank ratings. Its downgrade was a "nonevent", he said.

"In SA they dropped the 'systemic support uplift' from two notches to one notch for all our banks," he said.

FirstRand group treasurer Andries du Toit said the downgrade potentially affected the price of offshore foreign currency funding.

kamhungas@bdfm.co.za