Cape Town – The new Finance Ministry has assured the Banking Association of South Africa (BASA) that there will not be a shift in policy, BASA managing director Cas Coovadia said in a statement.
New Finance Minister Malusi Gigaba said he was committed to addressing the economic environment the country finds itself in after the recent credit ratings downgrade, said Coovadia. The leaders of South Africa’s banks - including Coovadia and the CEOs of Standard Bank, Absa, Nedbank, FirstRand and Investec, as well as the CEO of Deutsche Bank who represented international banks in South Africa - met with Gigaba, his deputy Sfiso Buthelezi and senior officials from National Treasury on Wednesday.
“The banking delegation emphasised its view that the manner in which recent appointments had been handled was unfortunate,” Coovadia said. “The delegation also pointed out that institutional stability as well as the need to convey certainty of commitment to the established macro-economic framework was critical.”
In the early hours of Friday March 31, President Jacob Zuma reshuffled his Cabinet and removed Pravin Gordhan as finance minister and Mcebisi Jonas as his deputy. Three days after the shock removal, rating agency Standard & Poor’s cut South Africa’s credit rating to junk status.
The rand has since plummeted against major currencies, while banking stocks have lost more than R61bn.
On Wednesday, S&P also downgraded South Africa’s biggest banks to non-investment grade (BB+) to fall in line with its rating of the country.
Nedbank, Absa, Investec and FirstRand were downgraded by S&P after markets closed in South Africa on Wednesday. The banks were also placed on ratings review by rating agency Moody’s.
In his statement, Coovadia emphasised that the meeting with Gigaba and his delegation was conducted in a “very constructive manner” and concluded with a commitment from the banks to work with the National Treasury to achieve shared objectives.Read Fin24's top stories trending on Twitter: Fin24’s top stories