State-owned bank ‘could harm SA’
COSMETIC: FRAGILE COUNTRY DOES NOT NEED RISK Buying-out shareholders could be an expensive exercise.
The South African Reserve Bank (Sarb) yesterday warned the ANC that changing the ownership structure of the bank would probably have dire consequences for the country.
The Sarb in a statement said it could raise the level of risk and uncertainty for the country in both a financial and economic policy sense.
“This heightened exposure to risk is unwarranted given the country’s fragile economic situation,” the statement read.
Furthermore, the “buying-out” of existing shareholders will be an expensive exercise which will only achieve “cosmetic changes that will have no bearing on the manner in which the Sarb carries out its mandate or executes its policy responsibilities”.
“The Sarb functions in the public interest; private shareholders have no influence whatsoever on monetary policy, financial stability, or banking regulation.
“Policy making and execution is the preserve of the governor and the deputy governors, who are appointed by the president,” the bank said.
According to the Sarb, 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. According to the Sarb Act, shareholders receive a fixed annual dividend of 10 cents per share, making the total annual dividend payout R200 000.”
The bank further states that its shares currently trade for much less than the price at which some shareholders are willing to sell their shares. Share trade is done over-the-counter after the Sarb delisted from the JSE in 2002.
The Sarb statement yesterday followed after the ANC announced that it had ratified a proposal for the state to own the central bank.