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FEATURE: Widening the pool
03 May 2011
Global Investor/isf looks at the South African securities lending industry after the crisis
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South Africa
secrurities lending
The financial crisis hit South Africa less hard than most developed financial markets. Domestic exchange controls meant that many South African financial institutions were prevented from investing beyond their home market, meaning that they largely avoided exposure to the more speculative derivative products, such as asset backed securities, which reaped such havoc on the investment banks in the US and the UK.
Similarly, those global investment banks hit hardest by the financial crisis generally had small – if any – operations in South Africa; Lehman and Bear Stearns had no business in this market, for example. All this meant that the crisis had a limited impact on the volumes or constituents of the lending side.
Philip Croeser, head of securities lending and borrowing (SLB) in SG South Africa says that just three pension funds have exited the SLB market since the financial crisis, leaving around 60% to 70% of the...
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