Global credit crisis spares SA banks

By Staff Writer

By Richard Stovin-Bradford While banks in the rest of the world rank liquidity – the supply of money – as their prime concern, South African banks quizzed by the Centre for the Study of Financial Innovation for its annual Banking Banana Skins survey placed liquidity only seventh in their list of top risks.

This shows the extent to which South Africa’s main banks have remained relatively unscathed by a global credit crisis that has forced top banks elsewhere to turn to shareholders and sovereign wealth funds in Asia and the Gulf to replenish their balance sheets after suffering heavy losses.

Tom Winterboer, the local banking partner of audit firm PricewaterhouseCoopers, which sponsored the survey, said: “To the credit of the Reserve Bank, it started looking at (SA) banks’ liquidity a couple of years ago.”

The top two issues bothering South African bankers are credit spreads followed by credit risk.

The survey explains that variations in the cost of credit to different classes of borrower created opportunities for banks to trade one class against another.

However, the sub-prime bubble compressed these spreads as the market ignored the extra risk in low class assets.

In its high ranking of credit risk – the second issue for all respondents – SA was little different from its global counterparts. The strongest concerns listed by global respondents chime loudly with bankers locally.

They were consumer indebtedness, the overheated housing markets, sub-prime woes and soaring credit card debt.

Recent Articles

Featured Do you need credit to survive Easter?

Easter weekend is here and with it the expectation of celebration. While there is nothing wrong with this, it often means spending more money than you bargained for.

 

Read more

Young woman building a legacy brick by brick

When her dad passed away, Siyasanga Ngcongca, an internal auditing graduate, took over the family business. Ngcongca Construction, as her company is known, is a service provider to five insurance companies, handling building and commercial claims.

Read more

Can you evict paying residential tenants?

One of the most common reasons for wanting to evict a tenant is non-payment of rent. But there are many other situations that landlords may encounter. These can range from damaging property and breaching contract, to being reported as a continuous disturbance by neighbours.

Read more

How one entrepreneur designed her financial future

From as early as Cannon remembers, she recalls her grandmother seated behind a sewing machine. Through this influence she was sewing her own aprons and doll dresses by the time she was ten, and by the time she was 16, she started designing and make her own clothes.

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

Woodstock Grill and Tap Monday Burger Madness

Price: R75
When: Mondays
Where: Cape Town

Active Sushi Special

Price: R199
When: From Tuesday to Sunday
Where: Cape Town

Let's Teach and Travel TEFL Online Course

Price: R2,400
When: Daily
Where: Online