Thu Oct 20 23:35:25 SAST 2016

Your money is safe in SA's banks

By unknown | Sep 19, 2008 | COMMENTS [ 0 ]

Madoda Milazi

Madoda Milazi

South African banks remain safe for money market investments despite the turmoil in the US and UK.

Stephen Rogers, joint managing director of Taquanta Asset Managers and head of its Cash Asset Management operation, yesterday said the bankruptcy of Lehman Brothers, the take-over of Merrill Lynch by Bank of America, and the US Federal Reserve having to bail out AIG only days after it took control of mortgage lenders Freddie Mac and Fannie Mae, has sent shivers through the local investment community.

He said South Africa's banking sector was relatively safer than its counterparts globally because local banks were more likely to raise offshore funding as opposed to placing funds offshore.

Christopher Gilmour, analysts at Absa Asset Management Private Clients, said South Africa's geographical isolation from the developed world has been its biggest advantage - shielding it from the US sub-prime crisis.

Gilmour said South Africa was still very isolated compared with its emerging economy peers and the developed world, and this has proved to be a great advantage under current market conditions

"SA banks don't have much contact with their overseas counterparts regarding borrowing or lending, so the credit crunch has hardly affected them, if at all. There is little if any chance of contagion from the US or UK creeping into our domestic banking market," said Gilmour.


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