Sarb boss warning

Bloomberg

SA Reserve Bank (Sarb) Governor Lesetja Kganyago has a fight on his hands to protect the central bank’s $50 billion (R736 billion) of reserves.

More than eight months after the ANC decided that Sarb should be state-owned, like most other central banks, the governor said his main concern remains to protect the regulator’s independence and mandate.

But also at risk may be billions of dollars in reserves and a legal brawl that could last for years.

While the 97-year-old Reserve Bank’s shares are only worth about R20 million based on the current share price, some shareholders have argued the bank’s assets belong to them and they should be compensated for that when the government nationalises the institution, according to Kganyago.

About 8% of its 770 owners are foreigners, so steps to nationalise could be challenged.

“This is not a fight I want to be busy with,” Kganyago said. “There is sufficient emerging-market turmoil that keeps me busy. I should not be wasting my time on this thing.”

Last month, the Economic Freedom Fighters (EFF) tabled a Bill to make the Reserve Bank state-owned.

If the law is passed, the change would be mainly cosmetic. That’s unless it’s used as a gateway to meddle with the mandate again, the governor warned.

“Is this a Trojan horse?” Kganyago asked.

“If it leads to a point that there’s that debate about the mandate of the bank and the independence of the Reserve Bank – check what happened with Turkey, check what happened in Argentina, check what happened in Venezuela. If you want an African example, check what happened in Zimbabwe.”

“Should the [EFF] interfere with our independence, they’ve got a fight on their hands,” Kganyago said.

“You can rest assured that we will have protracted fights in the courts,” he said. “[And] the legal costs associated with that are going to be massive. There’s no doubt about that,” he warned.