Deutsche settles dispute with one-billion rand

Deutsche Bank will do one billion rand worth of deals that will be positive for South Africa’s foreign reserves under a secret agreement prompted by a probe into the currency’s 2001 slide, newspapers said on Monday.

An official at the central bank said the Reserve Bank could not comment on the matter and Deutsche could not be reached immediately for comment.

South Africa’s central bank and Deutsche Bank said on Friday they had reached a closed agreement related to complex offshore deals Deutsche structured last year that triggered an inquiry into the rand’s 37% slide against the dollar in 2001.

The inquiry, headed by former labour judge John Myburgh, was set up earlier this year by President Thabo Mbeki in response to allegations by business leader Kevin Wakeford that there had been dubious manipulation of the market.

Wakeford’s original letter to Mbeki highlighted a 350-million euro asset-swap deal set up to help fuel group Sasol refinance part of its 1,3-billion euro purchase of German utility RWE AG’s Condea chemicals unit in 2001.

Deutsche also arranged corporate asset swaps for packaging group Nampak and mobile operator M-Cell.

The Business Report, newspaper, citing unnamed sources, said that Deutsche admitted to no wrongdoing and that the bank was given an unspecified period of time to do the foreign exchange boosting transactions.

Business Day said that neither the central bank nor Deutsche conceded that any wrongdoing had been done and that the agreement was a symbolic gesture to settle the dispute.

The central bank said in April that the initial disclosures by Deutsche Bank related to the deals were ”inadequate.” The probe will present its final report to Mbeki by the end of June.

It released an interim report earlier this month but said at the time that it was premature to make any findings.

Some banks and analysts have said that steps taken by the Reserve Bank to enforce existing exchange controls more strictly contributed to the rand’s unprecedented slide last year as liquidity dried up, making the currency vulnerable.

Other factors cited as likely to have contributed to its fall included economic disturbances in fellow emerging market Argentina and political troubles in neighbouring Zimbabwe.

The rand has clawed back about 15% of its value against the dollar so far this year, boosted by a higher gold price, an upturn in the commodity cycle and the return of emerging markets to investor favour. – Reuters

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