Ratings Agency S&P has downgraded South Africa's banks to bring their ratings in line with the country's foreign-currency rating of BB+ with a negative outlook.
This includes the ratings of FirstRand Bank, Nedbank, Investec Bank and Absa.
According to Business Day on Friday, S&P does not rate Standard Bank or Capitec. The paper quoted S&P analysts who said: "The ratings reflect that of the sovereign and indicate that we could lower the ratings further if we lower our foreign-currency ratings on SA."
FirstRand group treasurer Andries Du Toit told the paper that foreign currency ratings give banks the ability to get access to the international derivative market, "to hedge risk on behalf of customers and gain access to international funding markets".
He said that a downgrade means this source of funding becomes scarcer and more expensive, and this cost is transferred to the borrowers.
"Because banks are financial intermediaries, the sector reprices to the consumer immediately," he reportedly said.
Ursula Nobrega, spokesman for Investec, told Business Day that the downgrade of a country's foreign currency rating is not an indication of an entity's "ability to pay back local currency debt".
She said the downgrade would have an "immaterial" impact on the bank's overall cost of funding.
The South African Reserve Bank reportedly said the banks had sufficient capital to deal with the ratings downgrade.