Marcus fights off greedy punters

The Reserve Bank faces a challenge driven by a small group of shareholders trying to make profit at the expense of the national interest, Bank governor Gill Marcus said yesterday.

The government and the Bank said some shareholders were pushing for nationalisation so that they could be paid for their shares.

"The institution faces a challenge, ostensibly lacking in principle and evidently driven by the self-interested profit motive of a very small minority of shareholders," Marcus said in a letter to shareholders, published on the Bank's website. "This small minority does not appear to care about the national interests of South Africa."

The Bank is one of the few central banks in the world to still be owned by private shareholders, a system originally meant to give South Africans a chance to own a small number of shares.

"Profit making should never be a motive for holding shares in the Bank. The Bank is neither designed nor expected to maximise profits," Marcus said.

Shareholders are entitled to appoint half of the board of directors but have no say in the day-to-day operations, or policies, of the bank.

Source: Times Online

Shareholders do not control the South African Reserve Bank

An extract from the remarks by Dr Monde Mnyande, Advisor to the Governor and Chief Economist of the South African Reserve BankBank, presented at the Leadership Forum of Airports Company South Africa on 12 March 2010

There has been much discussion in the media about the private shareholders of the South African Reserve Bank following on comments by the Secretary-General of the Governing Party Mr Gwede Mantashe. There still appears to be a lot of uncertainty notwithstanding a press release by the Bank on 25 January 2010 to clarify the matter.

To put my remarks in perspective, the central banks of, among others, Italy, Japan, Pakistan and South Africa, are institutions with shareholders other than their respective governments. The Bank is an institution created by statute, with the status of an independent legal person, which may not be liquidated other than by an Act of Parliament. Its independence is entrenched in the Constitution and it is not owned by anyone but by South Africans. In that sense it belongs to the country as a whole and control of the SARB is exercised between its shareholders and Government in a manner whereby the latter, in normal circumstances, may exercise ultimate control over the SARB. Furthermore, the SARB Act does not grant shareholders any authority to remove directors. By virtue of the fact that the Bank is a statutory institution, the shareholders are also unable, by means of a resolution or otherwise, to amend or change the Bank’s constitution.

Reserve Bank clarifies a SAPA report

Statement issued by Gill Marcus, Governor of the South African Reserve Bank

There are a number of extremely unfortunate and misleading distortions in the SAPA report of the discussions that took place today before the Parliamentary Finance Committee. The appearance before the Committee lasted three and a half hours and a wide range of issues were discussed in a very constructive meeting.

I will only address two issues:
A) The question of the SARB's view of the role of shareholders in relation to ownership of the Bank was raised. The response was that the central bank in any country has a unique place and role. It is a national asset that acts in the interests of the country as a whole, and did not act with a profit motive. In fact in certain circumstances its decisions may require actions that result in a loss of income. It is unfortunate that there are a number of shareholders who, through their actions, do not recognise these responsibilities. They are claiming that the reserves of the SARB should be distributed to shareholders, and talk of nationalisation to effect a change of ownership that would then create the circumstances for this to happen.