Capitec Cut by Moody’s After Failure of Rival African BankMichael J. Moore
Capitec Bank Holdings Ltd. was downgraded by Moody’s Investors Service on the expectation that South Africa’s central bank won’t protect creditors in a failure after the collapse of a rival this week.
The deposit rating was cut two levels to Ba2 from Baa3, Moody’s said today in a statement on the Johannesburg-based bank. Capitec also faces “weaker economic growth, reduced consumer affordability and high consumer indebtedness that are leading to higher credit costs,” Moody’s said.
The South African Reserve Bank put African Bank Investments Ltd. into curatorship, akin to Chapter 11 bankruptcy, on Aug. 10 after the company said it needed at least 8.5 billion rand ($800 million) of capital to survive.
Capitec is “extremely dissatisfied with the extent of the review and its conclusion” and said its situation is different than that of its failed competitor, the lender said in a statement on its website.