22/12/2017 07:04 SAST | Updated 22/12/2017 07:04 SAST

Reserve Bank: Nationalisation Would Be Damaging

The bank says nationalising it would be a damaging "cosmetic" exercise.

South African Reserve Bank governor Lesetja Kganyago.
Shannon Stapleton / Reuters
South African Reserve Bank governor Lesetja Kganyago.

The South African Reserve Bank (SARB) says attempts to "nationalise" it would be a "cosmetic exercise" which would be damaging and costly, according to Business Day.

At its national conference this week, the ANC resolved that the private shareholders in the SARB should be bought out, as it is unusual for a central bank to have private shareholders. However, HuffPostSA reported that this does not mean outright nationalisation as the independence of the bank will not be compromised.

The SARB's private shareholders have very little power over how the bank operates or who governs it.

In July, SARB governor Lesetja Kganyagop explained: "..shareholders in the SARB have very limited rights; have no role whatsoever in the setting of, or influencing, the key mandates of the SARB, i.e. monetary policy and financial stability policy; have no sway over the day-to-day management of the SARB; are restricted to a maximum of 10,000 shares per shareholder out of 2-million issued shares (including those of their associates); receive a fixed return on their shares of 10 cents per share from profits made (this amounts to an overall divided payment by the SARB of R200,000 per year).

"In fact, 90% of the SARB's profits are transferred to government, and the remaining 10% is allocated to the SARB's reserves. Shareholders do not have any claim on the foreign exchange reserves of the SARB; and are unable, by means of a resolution or otherwise, to amend or change the SARB's affairs by deviating from the prescriptions of the SARB Act."

Analysts also pointed out that the bank's private shareholders had little power.

On Thursday, the bank said attempts to change its ownership structure would raise the level of risk and uncertainty for the country, both economically and from a policy perspective.

"This heightened exposure to risk is unwarranted given the country's fragile economic situation," it said.

The Banking Association of South Africa also expressed concern about the ANC's decision but said it would work with party leaders who are committed to the national interest.