SA Reserve Bank AGM to be delayed

Minister Gordhan says the AGM will now be held in December allowing for time for the new SA Reserve Bank Bill to be promulgated in parliament

The South African Reserve Bank has announced that its annual general meeting of shareholders has been delayed.

In an online statement signed by bank Secretary, JJ Rossouw, he says the bank faces certain challenges which may adversely affect what he calls “the sound functioning of the Bank and thereby negatively impact on the national interest of South Africa”.

The statement goes on to say it is regarded of the utmost importance that certain of the provisions of the Act be amended as envisaged in the South African Reserve Bank Amendment Bill, 2010), as soon as reasonably possible, for purposes of this year’s AGM to take place.

Reserve Bank bill process challenged

The Reserve Bank was pushing through amendments to its founding act with “unseemly haste”, Charl Kocks, head of African governance ratings agency Afrika Ratings, told MPs yesterday.

His criticism adds to the chorus of complaints by disgruntled Bank shareholders who object to the proposed amendments, intended to limit their power to elect representatives to the Bank’s board.

Countering this opposition during public hearings on the South African Reserve Bank Amendment Bill held by Parliament’s two finance committees were the National Economic Development and Labour Council (Nedlac) social partners.

Bank warned against shareholder change

It is not only disgruntled private shareholders of the Reserve Bank who are opposing proposed legislative amendments to the way the institution is governed.

An independent think-tank and a university professor have joined the chorus of opposition, on grounds that the proposals would undermine corporate governance and democratisation.

Until now opposition to the South African Reserve Bank Amendment Bill — and its provisions to limit shareholder power — has seemed to emerge from a fringe of noisy shareholders who every year cause a rumpus at the bank’s annual general meetings and are demanding a greater share of its profits as a dividend.

Have your say on the South African Reserve Bank Amendment Bill

The South African Reserve Bank Amendment Bill [B10-2010]

Submissions and Hearings

 The Standing Committee on Finance invites shareholders and interested parties to submit written submissions on the South African Reserve Bank Amendment Bill [B10-2010].

The Bill seeks to amend the South African Reserve Bank Act, 1989 (Act 90 of 1989) in order to achieve the following objectives:

• To amend the South African Reserve Bank Act, 1989, as to provide for the amendment of certain definitions, and the insertion of new definitions and the deletion of a definition;

Marcus calls for SARB amendment bill to be fast-tracked

Following Finance Minister Pravin Gordhan’s comments last week that the government is to amend the country’s Reserve Bank Act, SARB Governor Gill Marcus yesterday urged the country’s Parliament to “fast track” the South African Reserve Bank Amendment Bill.

This comes amid calls for the nationalisation of the SARB by some of its board members. Marcus said that she would “appreciate it” if  the bill were passed ahead of the Bank’s  annual general meeting, which is scheduled for September, and asked for government to hold public hearings on the bill in “perhaps a slightly shorter time than is normally done”.

Marcus noted that there would be three vacancies that need to be filled at this meeting, and therefore, she would like the process to be governed by the new legislation.

SA’s labour unions and businesses call for a competitive exchange rate

Yesterday South Africa’s three major trade union federations and a number of large local manufacturers signed a joint declaration calling for “interventions to ensure an appropriately valued, competitive and stable currency”. Congress of South African Trade Unions Secretary General Zwelinzima Vavi said yesterday that a competitive currency was needed in South Africa in order to allow domestic manufacturers to compete on a similar footing to that of other countries.

Vavi also called for a further reduction in real interest rates along with the introduction of concessional financing for productive investment.

It remains an open question as to what the “correct” level for the currency that would satisfy both exporter and importer concerns would be.

More on the SARB shareholder muddle

Although it is said that shareholders in the SA Reserve Bank have no say in the operations of the central bank or monetary policy some shareholders use their holdings to disrupt Reserve Bank general meetings, using time-wasting tactics to press their demands, which the central bank and government say is, ultimately, to ensure bigger payouts.

One such shareholder, Mario Pretorius, pictured right, found himself in the limelight last week when minister of finance Pravin Gordhan announced that he would be piloting a bill through parliament designed to limit the influence of private shareholders over the central bank.

"Certain shareholders might be circumventing the law and accumulating the shares to influence decision-making at the annual general meetings of the board, and to improperly interfere in the operations of the bank itself," Gordhan said.

State ready to take on Reserve Bank shareholders

The government expects private shareholders unhappy with proposed changes to the Reserve Bank Act to challenge them in court, but it is confident that it would win any litigation, a Cabinet spokesman said yesterday.

Finance Minister Pravin Gordhan announced the proposed amendments on Monday. They tighten the rules on shareholding in the central bank in a bid , the government says, to stop the Bank's independence being undermined by private shareholders whom the government claims are motivated solely by profit to the detriment of the national interest.

Chief government spokesman Themba Maseko said yesterday: "Our view is that the process we are implementing is fully in line with existing procedures and regulations."

Bill limits SARB shareholders

Cabinet has approved the SA Reserve Bank Amendment Bill that will limit shareholders' activities.

This followed concerns that activities by private stakeholders were attempts to undermine the bank's independence, Finance Minister Pravin Gordhan told a media briefing in Pretoria on Monday.

"The governor [Gill Marcus] has concerns about the way in which private stakeholders have been conducting themselves," Gordhan said.

Private stakeholders had recently voiced concerns about their involvement in key decisions.

"There are no rights as far as we are concerned that the shareholders have or think they have," said Gordhan.

Nationalising the Reserve Bank

Gwede Mantashe mooted the idea of nationalising the Reserve Bank.

This is a nationalisation that makes sense. The bank has the job of managing our foreign currency holdings and the value of our currency. As such it belongs to all of us and not just to its shareholders.

But central banks, when they emerged in the 1600s, were conceived as joint ventures between private and public interests. The privately owned banks took shares in the central bank and were represented at board level to ensure that they operated in broad rather than narrow interests.

To ensure that individuals do not profit from their involvement in the central bank, strict limits have been imposed on what proceeds they may draw. In the case of the South African Reserve Bank this is a dividend of 10c a share a year. You would not then, in the normal course of things, invest in this central bank to be able to make money.