STANBANK: 18,664 +57 (+0.31%)
South Africa's financial stability threatened by MTN's $10 billion Nigeria bill - cenbank
JOHANNESBURG, Nov 7 (Reuters) - Billions of dollars in fines
owed by South African companies MTN and Standard Bank
to Nigerian regulators could increase the risk to South
Africa's financial system, the central bank said on Wednesday.
The Nigerian central bank in August accused telecoms firm MTN
and its lender Stanbic, a Standard Bank subsidiary, of illegally
sending $8.1 billion abroad.
The Nigerian government has also demanded $2 billion in
related taxes from MTN. The South African mobile operator makes
about a third of its annual core profit in the West African
The South African Reserve Bank (SARB) said in its
semi-annual review of financial stability that the repatriation
claim and the $2 billion underpayment in tax amounted to
approximately 100 percent of MTN's market capitalisation.
"Any potential impact on the South African financial system
arising from this event will depend on the eventual resolution
of the matters raised and MTN Group's ability to continue
meeting its debt obligations," the bank said.
"A potential worst-case scenario would be for the MTN Group
to disinvest from Nigeria," the central bank added.
In October a Nigerian judge set a hearing for the dispute
for Dec. 4.
Some analysts have cited the concentrated foreign currency
funding risk posed by MTN and a clutch of other Johannesburg
Stock Exchange-listed firms as a threat to the currency and the
central bank's foreign exchange reserves.
The central bank said that if there were a spillover from
the market turmoil linked to external debt and the foreign
currency funding crunch that hit Turkey and Argentina earlier
this year, South Africa could suffer sharp capital outflows and
exchange rate depreciation.
The rand is already down around 15 percent against
the dollar this year, while portfolio flows slumped dramatically
in the first half as a local recession exacerbated the global
flight from emerging markets.
(Reporting by Mfuneko Toyana; Editing by Hugh Lawson)
First Published: 2018-11-07 18:11:47
Updated 2018-11-07 18:30:19
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