Cape Town - The Reserve Bank and National Treasury believe the state is being held hostage by eight powerful and “greedy” family shareholder blocs in the country’s central bank.
Amendments to the Reserve Bank Act principally target these power blocs which together hold 261 000 shares, Reserve Bank legal adviser Johann de Jager said on Friday.
Last week, the amendments to the act – which curtail the voting rights of shareholders to prevent the risk of power blocs and make shareholding possible for ordinary South Africans – caused a loud outcry from some of the bank’s more than 600 private shareholders.
On Friday Reserve Bank governor Gill Marcus, in her response to recent public hearings, told the standing committee on finance that it was not necessary to review the proposed amendments. She wants parliament to pass them urgently.
Allegations of an absence of corporate governance were raised by some shareholders during the hearings.
Disinterested parties such as the Institute for Democracy in South Africa (Idasa) were not entirely in favour of the amendments, believing parliament’s supervisory role over the bank should be broadened.
Among other things, the amendment is designed to strengthen the current limitation of 10 000 shares per person and prevent shareholders from being able to circumvent the voting restrictions through family, friends and spouses. According to Marcus, these circumventions enable shareholders and their associates to influence up to 25% of the voting process.
South Africa is one of the few countries that have private shareholders in the central bank.
Outspoken shareholder, German Michael Duerr, and members of his family allegedly own 100 000 of the total shares in the bank together.
After Friday's hearing Duerr said he did not know why he was being targeted, as he won’t have the right to vote after the amendments came into force because he no longer resides permanently in South Africa. He alleges that he left the country after being threatened by former Reserve Bank governor Tito Mboweni.
Marcus stressed that the Reserve Bank is a public entity and shareholding cannot have a profit motive.
Government receives 90% of the bank's profits. Marcus railed against some shareholders' insistence on a single extraordinary meeting to discuss a proposal of a 10% capital issue of the bank's net profits to the end of March.
Marcus said that everywhere central banks' prospects for profits are currently strong because fines are being imposed when bailout packages are handed to struggling commercial banks. These fines bring additional revenue into the central bank.
The Reserve Bank’s shares currently trade over the counter at about R12.50 per share, but the shares have a nominal value of R1 and the dividend amounts to 10c per share.
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*This article was updated in June 2019 to reflect that at the time of writing, Duerr and his family members owned approximately 100 000 shares in the bank. Previously, it additionally reflected this share ownership as a percentage of the bank’s shares. As at 2019, the SARB has several hundred shareholders.