SA strips Land Bank debt of high quality asset status
JOHANNESBURG – South Africa’s central bank will no longer allow commercial lenders to use debt issued by state-owned Land Bank to meet their capital adequacy requirements as they are longer considered a “high quality liquid asset”.
Land Bank, the country’s largest agricultural focussed lender, was downgraded by Moody’s in January and defaulted on loans totalling 50 billion rand ($2.74 billion) in April, triggering fears about its ability to stay afloat.
That forced the South African Reserve Bank (SARB) last week to prohibit the use by banks and investment houses of Land Bank debt as collateral to access short-term funds at the central bank’s repo auctions, a key source of market liquidity.
Source: iol.co.za
