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BIFR1 - FirstRand Bank Limited - Amendment to FirstRand Bank Limited`s credit ratings FirstRand Bank Limited (Incorporated in the Republic of South Africa) (Registration No. 1929/001225/06) Company code: BIFR1 ("FRB" or "the Bank") AMENDMENT TO FIRSTRAND BANK LIMITED`S CREDIT RATINGS Noteholders are referred to the announcement issued by Moody`s Investors Service ("Moody`s") on 28 February 2012, in which the agency announced that it had downgraded by one notch the senior debt and deposit ratings of five South African banks. Subsequently Moody`s has downgraded by one notch some of the senior debt, subordinated debt, junior subordinated debt and deposit ratings of FirstRand Bank Limited. Moody`s stated that the rating actions were "not driven by a deterioration in the standalone financial strength or the financial performance of these five institutions." The agency indicated that 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. The downgrades are part of Moody`s global assessment of the systemic support levels incorporated in banks` deposit and debt ratings, which addresses the growing difficulties governments face in extending systemic support to their banking systems." According to Moody`s, its "reassessment of the support environment assumes a reduced capacity of the South African authorities to provide support to financial institutions if needed. This reduced capacity is also signalled by the negative outlook on South Africa`s A3 rating (please see "Moody`s changes outlook on South Africa`s A3 government ratings to negative from stable" dated 9 November 2011 for more information), which reflects the potential of increased pressure on the government`s finances. The reassessment is in line with recent global trends, where sovereigns dealing with a systemic banking crisis possess more limited options and face constrains in providing financial support. "The change in systemic support assumptions has resulted in the reduction of systemic support rating uplift to one notch from two notches before, for the five largest South African banks. Despite the South African government`s more constrained financial flexibility to absorb banking-related contingent liabilities under a tail-risk scenario, Moody`s believes that systemic support is still warranted in the banks` ratings as the authorities have sufficient powers to intervene, despite some constraints. "In addition, Moody`s does not foresee any meaningful political resistance from either the government or the electorate that would compromise in any significant way SARB`s willingness and ability to support the banking system. Moody`s also believes that the five largest South African banks are systemically important institutions for the country`s payment system, and that authorities would be willing to support them if required." SUMMARY OF RATING ACTIONS: FRB`s GLC deposit ratings have been downgraded to A3/P-2 (stable outlook) from A2/P-1. The long-term national-scale deposit rating of Aa2.za has been confirmed. With regards to the Bank`s EMTN programme, the foreign-currency senior unsecured debt rating has been downgraded to (P)A3 (stable outlook), from (P)A2. Any issued foreign-currency senior unsecured debt has been downgraded to A3 (stable outlook), from A2. The foreign-currency commercial paper has been downgraded to P-2 from P-1. With regards to the bank`s domestic MTN programme, the provisional local- currency senior unsecured debt rating has been downgraded to (P)A3 (stable outlook) from (P)A2. The provisional local-currency subordinated and junior subordinated debt ratings have also been downgraded to (P)Baa2 and (P)Baa3 (both with stable outlook), from (P)A3 and (P)Baa2 respectively. The provisional short-term local-currency rating has been downgraded to (P)P-2 from (P)P-1. The Aa2.za national-scale rating for senior unsecured debt has been confirmed. The national-scale rating for subordinated debt and for junior subordinated debt have been downgraded to A1.za and A2.za, from Aa3.za and A1.za respectively. Any issued local-currency junior subordinated debt has been downgraded to Baa3(hyb)(stable outlook) from Baa2(hyb), and any national-scale junior subordinated debt has been downgraded to A2.za(hyb) from A1.za(hyb). The C- BFSR (stable outlook), the P-1.za national-scale short-term deposit rating, the A3 long-term foreign-currency deposit rating (negative outlook) and the P-2 short-term foreign-currency deposit rating, all remain unaffected. The revised ratings are provided below: Rating type Revised rating and previous rating
GLC deposit rating A3/P-2 (stable outlook)from A2/P-1 Long-term national-scale deposit Aa2.za confirmed rating Provisional local-currency (P)A3 (stable outlook) from senior unsecured debt rating (P)A2 Provisional local-currency (P)Baa2 from (P)A3 subordinated debt rating Provisional junior subordinated (P)Baa3 from (P)Baa2 debt ratings Provisional short-term local- (P)P-2 from (P)P-1 currency rating National-scale rating Aa2.za confirmed for senior unsecured debt National-scale rating for A1.za from Aa3.za subordinated debt National-scale rating for junior A2.za from A1.za subordinated debt Local-currency junior Baa3(hyb)(stable outlook)from subordinated debt Baa2(hyb) National-scale junior A2.za(hyb)from A1.za(hyb) subordinated debt Please refer to the Moody`s press release for any further information. 1 March 2012 Debt Sponsor Rand Merchant Bank (A division of FirstRand Bank Limited) Date: 01/03/2012 12:33:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
