The South African Reserve Bank (SARB) has expressed concern over the policy of the ruling African National Congress to nationalise the country’s top bank.The apex bank responded to the ANC’s recent policy instruction to government to nationalize the SARB.
The party instruction would see government owning 100% of the bank’s shares – instead of the current arrangement where the shares were held by a number of private shareholders.
According to the SARB, “the process of changing the ownership structure of the SARB at this point in time could raise the level of risk and uncertainty for the country in both the financial and economic policy sense.”
“This heightened exposure to risk is unwarranted given the country’s fragile economic situation‚” the SARB said in a statement.
Noting that it functions in the public interest, the bank said its private shareholders have no influence whatsoever on monetary policy‚ financial stability‚ or banking regulations governing its operations.
It added: “Policy-making and execution is the preserve of the SARB Governor and the SARB Deputy Governors‚ who are appointed by the President.
“The rights of the private shareholders are highly circumscribed. A shareholder‚ and his or her associates‚ cannot hold more than 10‚000 shares out of the total of two million shares in issue.
“According to the SARB Act‚ shareholders receive a fixed annual dividend of 10 cents per share‚ making the total dividend payout each year of US$15.40.
“Nationalising the SARB would also be expensive as its shares currently trade for much less than the price at which some existing shareholders are willing to sell their shares‚” the bank continued.
The “buying-out” of existing shareholders would, therefore, result in paying large sums of money to effect cosmetic changes that would have no bearing on the manner in which the SARB carries out its mandate or executes its policy responsibilities,” the bank added.
The ANC policy instruction to nationalise the central bank was taken during the mid-December 2017 elective conference held in Johannesburg, which saw Deputy President Cyril Ramaphosa elected as ANC president to succeed former ANC leader President Jacob Zuma.
Re-disseminated by The Asian Banker from Journalducameroun.com