Deutsche Bank said on Tuesday it had agreed to arrange deals worth R800-million to offset perceived losses to South Africa’s foreign currency reserves from asset swaps it set up in 2001.
”The cost of implementing the set of transactions is not significant,” Deutsche said in a statement.
At the same time, the official Commission of Inquiry into the rand’s slide last year released details of the complex agreement between Deutsche and the South African Reserve Bank, parts of which were leaked to the media earlier this week.
Its statement said that the perceived loss of foreign currency reserves to South Africa stemming from an offshore asset swap which Deutsche set up for synthetic fuel producer Sasol last year amounted to 68,85-million euro.
Perceived losses generated by a similar deal set up for packaging group Nampak amounted to 12.2 million pounds, according to the agreement published by the Commission.
Deutsche Bank repeated that it believed the original share placements it set up to help the two companies fund their offshore expansion were neutral to positive for South Africa’s foreign exchange reserves.
”Nevertheless, DBJ (Deutsche Bank Johannesburg) offered to implement a set of transactions valued at about R800 million, that would address the Reserve Bank’s concerns regarding reserves neutrality,” it said.
”The Reserve Bank accepted this offer.”
Deutsche said it would also deposit 10 million rand with the central bank, interest free, which would be returned to DBJ on completion of the original asset swaps, involving the placement of Sasol and Nampak shares with long-term foreign investors.
Those deals came under intense scrutiny at public hearings for the inquiry into the rand’s unprecedented slump in 2001, launched by President Thabo Mbeki after a business leader alleged that ”dubious deals” had manipulated the market.
Central bank officials have said they would not have approved the asset swaps if Deutsche had disclosed that it would sell rand for foreign currency to hedge its exposure to South African shares it held as a result of the deals.
Deutsche maintains that the currency sales were more than offset by repurchase agreements for South African bonds which were also part of the original share placements.
The statements were released after central bank governor Tito Mboweni said he was ”embarrassed” at the way the confidential settlement had been handled and it was in the public interest for it to be made public. – Reuters