South Africa’s largest banks have raised a combined $322 million, equivalent to about R5.19 billion, through the issuance of new loss absorbing debt instruments under the country’s strengthened banking resolution framework, according to Bloomberg.
Absa Group issued R3.2 billion of the new notes, which are linked to Zaronia, South Africa’s benchmark overnight rate. The offering drew strong investor demand, with bids more than twice the amount on offer. Meanwhile, Standard Bank Group raised R2 billion across multiple tranches in its own debut issuance of similar instruments.
Business Insider Africa reported that the securities form part of the Funding for Loss Absorbing Capacity framework introduced by the South African Reserve Bank, aligning the country’s regulatory regime with global reforms implemented after the 2008 financial crisis. These instruments can be written down or converted into equity if a bank experiences severe financial distress, reducing the risk of taxpayer funded bailouts.
Regulators estimate that South Africa’s six largest banks may need to raise up to R360 billion in such capital by 2030, with a significant portion required by 2027. The successful debut issuances signal growing investor appetite for bank capital instruments designed to strengthen financial system resilience.
