STANDARD BANK OF SOUTH AFRICA LD - Amendment to the Credit Ratings of The Standard Bank of South Africa Limited

Amendment to the Credit Ratings of The Standard Bank of South Africa Limited

THE STANDARD BANK OF SOUTH AFRICA LIMITED
(Incorporated in the Republic of South Africa)
(REGISTRATION NUMBER 1962/000738/06)

Amendment of the long-term local currency rating to Baa1 and the
long-term national scale rating to Aa3.za of The Standard Bank
of South Africa Limited (“SBSA”) by Moody’s Investor Services
(“Moodys")

IN TERMS OF SECTION 4.25 OF THE JSE DEBT LISTING REQUIREMENTS,
NOTICE IS GIVEN TO ALL HOLDERS OF NOTES: SBS, SBK, SBN, SBC,
SBAG1, SBAS1, SBAPL1, SBAPD1, SBAE, SBACRN, SBAWHT, SBACOP,
SBAOIL, SBACI, SSN and CLN (all JSE listed bonds issued in terms
of The Standard Bank of South Africa Limited’s Domestic Medium
Term Note Programme and Structured Note Programme (formerly the
Credit Linked Note Programme))

In terms of section 4.25 of the JSE Debt Listing Requirements,
notice is hereby given that Moodys has on 19 August 2014,
downgraded by one notch the long term local-currency deposit
rating of SBSA to Baa1 from A3. The bank’s long term national
scale deposit and issuer ratings have also been downgraded to
Aa3.za from Aa2.za. The long-term foreign currency rating
remains unchanged. All ratings of the bank were placed on
review for further downgrade. The rating action brings the
Bank’s local-currency deposit and debt ratings in line with its
Baa1 foreign currency deposit rating and the South African
Sovereign Baa1 bond rating.

The rating actions announced today are linked to Moody’s
assessment of the South African banking industry as a whole and
is not a reflection of any fundamental changes in SBSA's
financial strength, earnings resilience or credit quality.

The one notch downgrade of the local-currency deposit rating
reflects Moody's view of the lower likelihood of systemic
support from South African authorities to fully protect
creditors in the event of need. This updated opinion was
prompted, most recently, by the actions taken by the South
African Reserve Bank (SARB) in response to the abrupt loss of
creditor confidence in African Bank Limited.

The review for further downgrade reflects the rating agency's
concerns regarding weaker economic growth, particularly in the
context of consumer affordability pressures and still high
consumer indebtedness that are likely to lead to higher credit
costs for the banks. Moody’s notes the broad resilience
demonstrated by South African banks in the past, including the
management of adverse economic environments and recognises the
solidity of key system financial metrics; however, the rating
agency is also concerned about potential asset quality pressure
building up in the retail, small and medium enterprise (SME) and
corporate loans segment of the SA banking sector. To this end,
the review will focus on a forward-looking assessment of the SA
banking sector capital, funding and liquidity buffers against
risks stemming from the increasingly challenging operating
conditions.

The Standard Bank Group’s overall liquidity position remains
strong with liquidity buffers amounting to R169.3 billion at 30
June 2014. The group maintains strong Basel III capital ratios -
at 30 June 2014 tier I capital ratio of 12.7% and a total
capital ratio of 15.2%. The Standard Bank of South Africa’s
capital ratios at 30 June 2014 were 12.2% on a tier 1 basis and
15.3% on a total capital adequacy basis. Both capital and
liquidity ratios are in excess of regulatory and other internal
requirements.

Standard Bank supports the SARB’s view that South Africa’s
banking sector remains healthy and robust, and there have been
no indications that other South African banks have been affected
negatively by the specific issues around African Bank Limited.

For commentary on the detailed ratings action taken on SBSA
together with the other South African Banks, please refer to the
Moody’s press release on their website:
https://www.moodys.com/research/Moodys-downgrades-four-South-
African-banks-on-review-for-further--
PR_306571?WT.mc_id=MDCAlerts_realtime%7e1455034c-e2f7-4ac5-a2ba-
63bdbd37e672

Johannesburg
20 August 2014

For further information please contact:
Reshika Harilall - Group Ratings Management
Tel: +27 11 415 4349
Email: Reshika.Harilall@standardbank.co.za

Or

Ann Hunter – Head: Strategic Funding
Tel: +21 11 415 4194
Email: Ann.Hunter@standardbank.co.za

Debt Sponsor – The Standard Bank of South Africa Limited

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