Seven S. African banks downgraded

The international rating agency S&P downgraded South Africa's seven financial institutions to non investment grade on Thursday.

This came three days after S&P downgraded the country's foreign currency ratings to sub investment (junk status). The banks whose ratings were lowered include Barclays bank, BNP Paribas Personal Finance South Africa, Investec bank, Nedbank, FirstRand bank, Absa and FirstRand.

"We lowered our ratings on the financial institutions because we do not rate South African banks above the foreign currency sovereign credit ratings. This is because of the likely direct and indirect influence of sovereign distress on domestic banks' operations, including their ability to service foreign currency obligations, " S&P noted in a statement.

S&P warned that they could lower the banks with a negative outlook ratings again when they downgrade the country's foreign currency rating. Weak economic growth and political instability are cited as among the reasons for the downgrade.

The rating agency however noted that the country' financial institutions have been resilient. Last year, the country's economic growth was about 0.3 percent while this year it's expected to be slightly above one percent.

"The lowering of the ratings on South Africa reflects our view that political and institutional stability in the country has weakened. However, amid slow economic growth and political turbulence, South African banks have been performing resiliently, " S&P adde