(Fitch released the following statement)

Fitch Ratings-London-17 June 2014: Fitch Ratings has revised the Outlook on Absa Bank Limited (Absa Bank), FirstRand Bank Limited (FirstRand), Nedbank Limited (Nedbank) and The Standard Bank of South Africa Limited (SBSA) and their respective rated holding companies to Negative from Stable.

The rating actions follow the revision of the Outlook on the South African sovereign rating to Negative (see ‘Fitch Revises South Africa’s Outlook to Negative; Affirms at ‘BBB” dated 13 June 2013 at www.fitchratings.com). The Outlooks on all National Ratings assigned to financial institutions in South Africa remain Stable, reflecting Fitch’s expectation that their ranking relative to the best credit in the country will remain stable.

KEY RATING DRIVERS – MAJOR BANKING GROUPS
The revision of the Outlooks to Negative reflects the four banks’ concentration to South Africa, a high proportion of liquid assets invested in government securities and a weakening operating environment as indicated by the Negative Outlook on the sovereign rating. The sovereign rating is effectively acting as a cap on large South African banks’ Viability Ratings (VR) at this rating level because of their strong links with South Africa.

The revision of the Outlooks on FirstRand, Nedbank and SBSA reflects that their Long-Term IDRs are driven by their VR and the effective sovereign cap.

Barclays Africa Group Limited (BAGL) and Absa Bank’s Issuer Default Ratings (IDR) are driven by the ratings of 62.3% parent, Barclays Bank Plc (Barclays, A/Stable). BAGL’s and Absa Bank’s IDRs are currently notched once from Barclays’ rating, reflecting Fitch’s view of BAGL and Absa Bank as strategically important subsidiaries. The Negative Outlook on the foreign currency IDRs does not reflect any changes in Fitch’s view of support from Barclays, but rather reflects the high correlation between these banks’ credit profile and that of the sovereign. Any potential uplift of support-driven financial institutions’ ratings above the sovereign is usually limited to two notches. This is also why the Outlook on BAGL’s and Absa Banks’s local currency IDRs remains stable, given that their local currency IDRs would still be within two notches from the sovereign local currency IDR if the sovereign was downgraded by one notch.

Investec Bank Limited’s (Investec) Long-Term IDR is driven by its VR. Considering that its VR is below the effective sovereign cap, Investec’s VR and Long-Term IDR are unaffected by the rating action on the sovereign.

The VRs of the five major banks’ continue to reflect strong domestic franchises, which underpin stable core earnings, sophisticated risk management, and acceptable liquidity and capitalisation.

The National Ratings of the major banking groups have been affirmed and are driven by the entities’ Long-term local currency IDRs. National ratings reflect the creditworthiness of an issuer relative to the best credit in the country.

KEY RATING DRIVERS – STANDARD BANK BRANCHES AND SUBSIDIARIES
The IDRs of Standard Bank Plc (SB Plc), a 100% UK subsidiary of Standard Bank Group Limited’s (SBG, BBB/F3/bbb) have been maintained in line with SBG’s ratings. SB Plc’s IDR is equalised with that of its parent as Fitch views it as being a highly integrated part of the group. Capital and liquidity are highly fungible across the various entities of the group. SB Plc currently does not have an independent strategy but supports the group through origination and by providing it with an additional foreign currency balance sheet. Around 40% of customer and bank deposit funding comes from the parent.

The rating remains on Rating Watch Evolving (RWE) following the announcement by SB Plc’s ultimate South African parent, SBG, that it intends to sell a controlling stake in SB Plc to Industrial Commercial Bank of China (ICBC, A/F1/bb).

The National Ratings of SBSA, Taipei branch, which are driven by SBSA’s foreign currency IDR, have been affirmed and withdrawn at Long-term ‘A+(twn)’ and Short-term ‘F1(twn)’. SBSA, Taipei Branch is a branch of SBSA and received regulatory approval for closure of the branch on 2 April 2014. The branch is no longer required due to the group’s strategy to focus on Africa.

The IDRs and National Ratings of CfC Stanbic Bank Limited (CfC Stanbic, Kenyan subsidiary) and National Ratings of Stanbic IBTC Bank Plc (Stanbic IBTC, Nigerian subsidiary) have been affirmed.

KEY RATING DRIVERS – SANLAM LIMITED SUBSIDIARIES
The National Ratings of Sanlam Capital Markets (Pty) Limited (SCM) and parent Genbel Securities (Pty) Limited (Gensec) have been affirmed. They are driven by a high perceived level of support from ultimate parent Sanlam Limited (Sanlam; AA-(zaf)) in line with Fitch’s assessment of these entities as strategically important subsidiaries of Sanlam. Fitch considers that Sanlam’s ability to provide this support is in turn driven by its various operating subsidiaries, for example Sanlam Life Insurance Limited (SLI; AA(zaf)). SCM’s guaranteed obligations cover most of SCM’s trading creditors and benefit from a direct guarantee from Sanlam. The guaranteed obligations are equalised with Sanlam’s National Ratings.

KEY RATING DRIVERS – STATE-OWNED DFIs
The National Ratings of the Development Bank of Southern Africa (DBSA) and Land and Agricultural Development Bank of South Africa (Land Bank) have been affirmed. They reflect the high perceived level of support these entities would receive as state-owned development finance institutions, incorporated by Acts of Parliament. They are driven by the sovereign’s ‘BBB+’ local currency IDR.

KEY RATING DRIVERS – DEBT ISSUED BY BRANCHES OF FOREIGN ENTITIES
BoC Johannesburg Branch’s DMTN Programme’s National Ratings are driven by Bank of China’s Long-term foreign currency rating (A/Stable).

RATING SENSITIVITIES – IDRS, VRs, NATIONAL RATINGS AND SENIOR DEBT- MAJOR BANKING GROUPS
The VRs and IDRs of Absa Bank, BAGL, FirstRand, Nedbank Group Limited (Nedbank Group), Nedbank, SBSA and SBG will be downgraded by one notch if the Negative Outlook on the sovereign results in a one-notch downgrade of South Africa.

In addition, the VRs of the five major entities as well as Investec’s IDR could be sensitive to a material weakening of asset quality and long-term earnings potential in an uncertain economic environment and/or a reduction in capital. Asset quality could be vulnerable to customer affordability in the event of sharp interest rate increases in a tightening cycle.

BAGL and Absa Bank’s IDRs could also be affected by a change in Barclays’ rating or willingness to provide support or if South Africa’s Country Ceiling falls below ‘A-‘.

Upward potential for the ratings is limited in light of a weaker sovereign and operating environment.

The banks’ National Ratings are sensitive to their relative creditworthiness compared with the best credit in the country and with peers. Negative rating action on FirstRand, Investec, Nedbank and Standard Bank would occur if there was a material weakening of asset quality and/or capital adequacy relative to peers. Absa’s National Ratings are sensitive to changes in Barclays’ ratings or willingness to provide support.

RATING SENSITIVITIES – IDRS, NATIONAL RATINGS AND SENIOR DEBT- STANDARD BANK BRANCHES AND SUBSIDIARIES
SB Plc’s ratings would be sensitive to any changes to SBG’s IDRs, and the outcome of the sale of a controlling stake in SB Plc to Industrial Commercial Bank of China. Fitch expects to resolve the RWE on completion of the transaction. This may take longer than the usual three-month horizon associated with the resolution of ratings watches but should be complete by or shortly after end-2014.

The Country Ceilings of Nigeria (BB-) and Kenya (BB-) are four notches below SBSA’s IDR. The support-driven IDRs of CfC Stanbic and the National Ratings of CfC Stanbic and Stanbic IBTC could withstand a downgrade of up to three notches of SBG’s local currency IDR before they would be affected.

Stanbic IBTC’s National Ratings would be sensitive to a change in the perceived level of support.

RATING SENSITIVITIES – SANLAM LIMITED SUBSIDIARIES
The National Ratings of SCM and Gensec would be sensitive to any change in Sanlam’s and/or SLI’s ratings.

RATING SENSITIVITIES -NATIONAL RATINGS – STATE-OWNED DFIs
DBSA and Land Bank’s National Ratings would be sensitive to any change in Fitch’s perception of the South African authorities’ willingness to support these entities if required. This could include public statements of a change in willingness to support these entities or potentially an increase in explicit, formalised support such as guarantees or callable capital facilities.

RATING SENSITIVITIES -SENIOR DEBT- DEBT ISSUED BY BRANCHES OF FOREIGN ENTITIES
BoC Johannesburg Branch’s DMTN Programme’s National Rating is sensitive to any change in BOC’s rating. The bank’s IDR is sensitive to changes in the perceived ability or willingness of the Chinese government to provide support to the bank.

China’s sovereign support to its major commercial banks could be sensitive to deterioration in the sovereign balance sheet. Other negative drivers may include significant weakening in economic growth or continued rapid growth of financial sector assets relative to GDP.

RATING DRIVERS AND SENSITIVITIES – SUPPORT RATING AND SUPPORT RATING FLOOR – MAJOR BANKING GROUPS
The Support Ratings (SR) and Support Rating Floors (SRF) of FirstRand, Investec Bank and SBSA’s were affirmed at ‘3’ and ‘BB+’ reflecting the moderate probability of support from the South African authorities. The SRs and SRFs would be sensitive to any perceived reduction in the willingness or ability of the South African authorities to support the banks, which may come with the implementation of a resolution regime or a downgrade of the sovereign. The SRs (5) and SRFs (No Floor) of Investec and SBG reflect Fitch’s view that support would flow directly to the operating entities if required.

Nedbank’s and Nedbank Group’s SRs of ‘2’ are derived from the potential support from 52%-parent Old Mutual Plc (A-/Negative). Fitch considers that support would flow to either entity in the event of need. Similarly, BAGL’s and Absa Bank’s SRs of ‘1’ are derived from the extremely high probability of support from Barclays if required.

The SRs of BAGL, Absa Bank, Nedbank and Nedbank Group would be sensitive to a change in Fitch’s perception of the level of support from the respective parents if required. This could be signified by public statements or a reduction in shareholding or an indication of an intention to sell. The SRs of BAGL and Absa Bank would be downgraded to ‘2’ if the sovereign is downgraded, or if the Country Ceiling falls below ‘A-‘. They could also be downgraded to ‘2’ if Barclays’ IDR was downgraded.

KEY RATING DRIVERS AND SENSITIVITIES – SR – STANDARD BANK BRANCHES AND SUBSIDIARIES
Fitch’s view of support for SB Plc, reflected in its SR of ‘2’ as well as the equalisation of SB Plc’s IDRs with SBG’s, is reinforced by a written undertaking in SBG’s annual report that it will ensure that SB Plc is able to meet its contractual liabilities, except in the case of political risk. In addition, SBG has committed to maintain SB Plc’s capital adequacy above the minimum requirements imposed by the Prudential Regulation Authority. In Fitch’s opinion, as long as SB Plc remains a 100% subsidiary of SBG, and until a sale is finalised, it is highly likely that support will continue to be provided by SBG to SB Plc if and when required, on a timely basis.

Until completion of the sale, SB Plc’s SR will continue to be sensitive to any change in SBG’s IDR, and a downgrade of its SR would follow a downgrade of SBG by more than one notch. The SR is also sensitive to the outcome of the sale of a controlling stake in SB Plc to Industrial Commercial Bank of China

CfC Stanbic’s SR of ‘3’ reflects a moderate probability of support. The SR is constrained by Kenya’s Country Ceiling of ‘BB-‘ and could be sensitive to SBG’s willingness or ability to provide support or to changes to the Kenyan sovereign ratings.

KEY RATING DRIVERS AND SENSITIVITIES – SANLAM LIMITED SUBSIDIARIES
SCM’s and Gensec’s SRs of ‘2’ are driven by a high perceived level of support from Sanlam, and in turn by its various operating subsidiaries, for example SLI. They could be sensitive to a change in Sanlam’s and/or SLI’s ability or willingness to support the entities.

KEY RATING DRIVERS AND SENSITIVITIES – SRs- STATE-OWNED DFIs
DBSA and Land Bank’s SRs reflect the high perceived level of support they would receive from the sovereign and could be affected if there was any weakening in the sovereign’s ability to support. This could be reflected by a downgrade of South Africa’s local currency IDR.

KEY RATING DRIVERS AND SENSITIVITIES – SUBORDINATED DEBT AND OTHER HYBRID SECURITIES
Subordinated debt and other hybrid capital issued by FirstRand, Investec Bank, Nedbank and SB Plc are all notched down from the VRs of ‘bbb’ for FirstRand and Nedbank, ‘bbb-‘ for Investec Bank and SBSA’s VR of ‘bbb’ for SB Plc in accordance with Fitch’s assessment of each instrument’s respective non-performance and relative loss severity risk profiles, which vary considerably. Their ratings are primarily sensitive to any change in the VRs.

The ratings of the subordinated debt and hybid capital of SB Plc are on RWE and will be reassessed once the transaction is completed. Until the sale is completed, the subordinated debt ratings are sensitive to a change in the SBSA’s VR and/or any change in Fitch’s view of non-performance or loss severity risk relative to SBSA’s viability.

The rating actions are as follows:
Barclays Africa Group Limited:
Long-term foreign currency IDR: affirmed at ‘A-‘; Outlook revised to Negative from Stable
Long-term local currency IDR: affirmed at ‘A-‘; Outlook Stable
Short-term foreign currency IDR: affirmed at ‘F2’
National Long-term rating: affirmed at ‘AAA(zaf)’; Outlook Stable
National Short-term rating: affirmed at ‘F1+(zaf)’
Viability Rating: affirmed at ‘bbb’
Support Rating: affirmed at ‘1’

Absa Bank Limited:
Long-term foreign currency IDR: affirmed at ‘A-‘; Outlook revised to Negative from Stable
Long-term local currency IDR: affirmed at ‘A-‘; Outlook Stable
Short-term foreign currency IDR: affirmed at ‘F2’
National Long-term rating: affirmed at ‘AAA(zaf)’; Outlook Stable
National Short-term rating: affirmed at ‘F1+(zaf)’
Viability Rating: affirmed at ‘bbb’
Support Rating: affirmed at ‘1’
Senior unsecured debt: Long-term foreign currency rating affirmed at ‘A-‘; Short-term foreign currency affirmed at ‘F2’
Senior unsecured notes National Long-term rating: affirmed at ‘AAA(zaf)’

FirstRand Bank Limited:
Long-term foreign currency IDR: affirmed at ‘BBB’; Outlook revised to Negative from Stable
Long-term local currency IDR: affirmed at ‘BBB’; Outlook revised to Negative from Stable
Short-term foreign currency IDR: affirmed at ‘F3’
Viability Rating: affirmed at ‘bbb’
Support Rating: affirmed at ‘3’
Support Rating Floor: affirmed at ‘BB+’
National Long-term rating affirmed at ‘AA(zaf)’; Outlook Stable
National Short-term rating affirmed at ‘F1+(zaf)’
Senior unsecured notes: Long-term foreign currency rating affirmed at ‘BBB’; Short-term foreign currency affirmed at ‘F3’; National Long-term rating affirmed at ‘AA(zaf)’
Subordinated notes: affirmed at ‘AA-(zaf)’
Upper tier 2 notes: affirmed at ‘A(zaf)’
Basel III-compliant Tier 2 subordinated notes expected Long-term rating affirmed at ‘BBB-(EXP)’ and expected National Long-term rating affirmed at ‘AA-(zaf)(EXP)’.

Investec Limited:
Long-term foreign currency IDR: ‘BBB-‘; Outlook Stable; Unaffected
Short-term foreign currency IDR: ‘F3’; Unaffected
Viability Rating: ‘bbb-‘; Unaffected
Support Rating: affirmed at ‘5’
Support Rating Floor: affirmed at ‘No Floor’

Investec Bank Limited:
Long-term foreign currency IDR: ‘BBB-‘; Outlook Stable; Unaffected
Short-term foreign currency IDR: ‘F3’; Unaffected
Viability Rating: ‘bbb-‘; Unaffected
Support Rating: affirmed at ‘3’
Support Rating Floor: affirmed at ‘BB+’
National Long-term rating: ‘A+(zaf)’; Outlook Stable; Unaffected
National Short-term rating: ‘F1(zaf)’; Unaffected
Senior unsecured debt: ‘BBB-‘ Unaffected, Short-term rating ‘F3’; Unaffected
Basel 3-compliant Tier 2 subordinated debt: National Long-term rating of ‘A(zaf)’ Unaffected

Nedbank Group Limited:
Long-term foreign currency IDR: affirmed at ‘BBB’; Outlook revised to Negative from Stable
Long-term local currency IDR: affirmed at ‘BBB’; Outlook revised to Negative from Stable
Short-term foreign currency IDR: affirmed at ‘F3’
Viability Rating: affirmed at ‘bbb’
Support Rating: affirmed at ‘2’
National Long-term Rating: affirmed at ‘AA(zaf)’; Outlook Stable
National Short-term Rating: affirmed at ‘F1+(zaf)’

Nedbank Limited:
Long-term foreign currency IDR: affirmed at ‘BBB’; Outlook revised to Negative from Stable
Long-term local currency IDR: affirmed at ‘BBB’; Outlook revised to Negative from Stable
Short-term foreign currency IDR: affirmed at ‘F3’
Viability Rating: affirmed at ‘bbb’
Support Rating: affirmed at ‘2’
National Long-term Rating: affirmed at ‘AA(zaf)’; Outlook Stable
National Short-term Rating: affirmed at ‘F1+(zaf)’
Senior unsecured notes: Long-term rating affirmed at ‘BBB’, Short-term rating affirmed at ‘F3’
Senior unsecured notes: National Long-term rating affirmed at ‘AA(zaf)’
Subordinated notes: affirmed at ‘BBB-‘

Standard Bank Group Limited:
Long-term foreign currency IDR: affirmed at ‘BBB’; Outlook revised to Negative from Stable
Long-term local currency IDR: affirmed at ‘BBB’; Outlook revised to Negative from Stable
Short-term foreign currency IDR: affirmed at ‘F3’
National Long-term rating: affirmed at ‘AA(zaf)’
National Short-term rating: affirmed at ‘F1+(zaf)’
Viability Rating: affirmed at ‘bbb’
Support Rating: affirmed at ‘5’
Support Rating Floor: affirmed at ‘NF’

Standard Bank of South Africa Limited:
Long-term foreign currency IDR: affirmed at ‘BBB’; Outlook revised to Negative from Stable
Long-term local currency IDR: affirmed at ‘BBB’; Outlook revised to Negative from Stable
Short-term foreign currency IDR: affirmed at ‘F3’
Viability Rating: affirmed at ‘bbb’
Support Rating: affirmed at ‘3’
Support Rating Floor: affirmed at ‘BB+’
National Long-term rating: affirmed at ‘AA(zaf)’; Outlook Stable
National Short-term rating: affirmed at ‘F1+(zaf)’
Senior unsecured debt: Long-term foreign currency rating affirmed at ‘BBB’; Short-term foreign currency affirmed at ‘F3’

Standard Bank Plc (UK subsidiary of SBG):
Long-term IDR: ‘BBB’ maintained on RWE
Short-term IDR: ‘F3’ maintained on RWE
Support Rating: ‘2’ maintained on RWE
Senior unsecured debt: Long-term rating ‘BBB’, Short-term rating ‘F3’; maintained on RWE
Subordinated debt: ‘BBB-‘ maintained on RWE
Subordinated perpetual notes (XS0262708554): ‘BB’ maintained on RWE

SBSA, Taipei Branch:
National Long-term rating: affirmed and withdrawn at ‘A+(twn)’; Outlook Stable
National Short-term rating: affirmed and withdrawn at ‘F1(twn)’

Stanbic IBTC Bank Plc (Nigerian subsidiary of SBG):
National Long-term rating: affirmed at ‘AAA(nga)’
National Short-term rating: affirmed at ‘F1+(nga)’

CfC Stanbic Bank Limited (Kenyan subsidiary of SBG):
Long-term foreign currency IDR: affirmed at ‘BB-‘; Outlook Stable
Short-term foreign currency IDR: affirmed at ‘B’
Viability Rating: ‘b’ – Unaffected
Support Rating: affirmed at ‘3’
National Long-term rating: affirmed at ‘AAA(ken)’; Outlook Stable
National Short-term rating: affirmed at ‘F1+(ken)’

Sanlam Capital Markets (Pty) Limited:
National Long-term rating: affirmed at ‘A+(zaf)’; Outlook Stable
National Short-term rating: affirmed at ‘F1(zaf)’
Support Rating: affirmed at ‘2’
Guaranteed obligations: National Long-term rating affirmed at ‘AA-(zaf)’; National Short-term rating affirmed at ‘F1+(zaf)’

Genbel Securities (Pty) Limited:
National Long-term rating: affirmed at ‘A+(zaf)’; Outlook Stable
National Short-term rating: affirmed at ‘F1(zaf)’
Support Rating: affirmed at ‘2’

Development Bank of Southern Africa
National Long-term rating: affirmed at ‘AA+(zaf)’; Outlook Stable
National Short-term rating: affirmed at ‘F1+(zaf)’
Support Rating: affirmed at ‘2’

Land and Agricultural Development Bank of South Africa
National Long-term rating: affirmed at ‘AA+(zaf)’; Outlook Stable
National Short-term rating: affirmed at ‘F1+(zaf)’
Support Rating: affirmed at ‘2’

Bank of China Limited – Johannesburg Branch
Senior unsecured DMTN programme:
National Long-term: affirmed at ‘AAA(zaf) ‘
National Short-term: affirmed at ‘F1+(zaf)’