The agency warns that there is a risk hanging over the refinancing of Kensington’s warehouse lines worth approximately £1.5bn.
Moody’s says the current economic environment has put “significant pressure on the financial fundamentals of the group”.
Moody’s says: “In the case of Investec plc, IBUK’s parent company, we note that there is a significant degree of exposure to its specialist lender Kensington in
the total amount of £519m (including warehousing lines and the
securitised book) and the potential for asset quality deterioration is
“Although currently Kensington remains a profit-making subsidiary,
in case of dissolution, it will lead to a likely negative impact of goodwill impairment.
“We also note that there is a medium-term risk of refinancing external warehousing lines extended to Kensington in the amount of approximately £1.5bn.”
The ratings agency has downgraded the long-term deposit rating of Investec Bank to Baa3 from Baa1, and the bank financial strength rating to D+ from C-, with a negative outlook.