RATING agency Standard & Poor’s (S&P) downgraded Barclays Africa’s credit rating on Wednesday after reviewing the bank’s strategic importance to British parent, Barclays.
The long term rating at zaA and the short term rating at zaA-2 is now at the same level as FirstRand Ltd, the holding company of FirstRand Bank.
The cut follows the announcement by Barclays plc that it would sell down its 62.3% stake in Barclays Africa due to strict regulatory requirements that affected ultimate returns to the parent company.
It plans to do this over the next two to three years. S&P’s decision follows similar action by rival agency Fitch Ratings earlier this week. The ratings agency downgraded the group’s foreign and local currency ratings to one level above sub-investment grade for the same reason.
But Barclays Africa said the changes in ratings brought the group in line with the other major banks. "Absa is rated zaAA-in line with all the other peer banks in SA," said Carli Cooke, acting spokeswoman for the banking group.
S&P said its ratings on the banking group no longer incorporated support from Barclays. They were also no longer equal to those of Absa, its core operating subsidiary.
The agency affirmed Absa’s ratings one notch higher, which is still investment grade.
"The rating on Absa does not include any uplift for external support, and is based on our BBB-group credit profile assessment for the Barclays Africa group," S&P primary analyst Samira Mensah said.
S&P believes Absa, which is regulated by the South African Reserve Bank, would receive more protection from the central bank than Barclays Africa.
"The (Reserve Bank) has the ability to halt Absa’s dividend payments to Barclays Africa to protect the bank’s depositors," Ms Mensah said.
• This article was edited to clarify that Barclays Africa’s short term rating was the same as that of FirstRand Ltd.
Standard & Poor's in New York. Picture: REUTERS
RATING agency Standard & Poor’s (S&P) downgraded Barclays Africa’s credit rating on Wednesday after reviewing the bank’s strategic importance to British parent, Barclays.
The long term rating at zaA and the short term rating at zaA-2 is now at the same level as FirstRand Ltd, the holding company of FirstRand Bank.
The cut follows the announcement by Barclays plc that it would sell down its 62.3% stake in Barclays Africa due to strict regulatory requirements that affected ultimate returns to the parent company.
It plans to do this over the next two to three years. S&P’s decision follows similar action by rival agency Fitch Ratings earlier this week. The ratings agency downgraded the group’s foreign and local currency ratings to one level above sub-investment grade for the same reason.
But Barclays Africa said the changes in ratings brought the group in line with the other major banks. "Absa is rated zaAA-in line with all the other peer banks in SA," said Carli Cooke, acting spokeswoman for the banking group.
S&P said its ratings on the banking group no longer incorporated support from Barclays. They were also no longer equal to those of Absa, its core operating subsidiary.
The agency affirmed Absa’s ratings one notch higher, which is still investment grade.
"The rating on Absa does not include any uplift for external support, and is based on our BBB-group credit profile assessment for the Barclays Africa group," S&P primary analyst Samira Mensah said.
S&P believes Absa, which is regulated by the South African Reserve Bank, would receive more protection from the central bank than Barclays Africa.
"The (Reserve Bank) has the ability to halt Absa’s dividend payments to Barclays Africa to protect the bank’s depositors," Ms Mensah said.
• This article was edited to clarify that Barclays Africa’s short term rating was the same as that of FirstRand Ltd.
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