Johannesburg, STUART GRAHAM | Thursday
THERE was no rational motive for the South African banking industry to drive down the value of the rand in the last quarter of 2001, the commission into the depreciation of the currency heard on Thursday.
The chief executive of the Banking Council, Bob Tucker, told the commission that evidence showed significant adverse consequences for the banking industry flowed from the currency’s depreciation.
”If the revenues from foreign exchange dealing, derivatives and bond trading are aggregated, there was virtually no increase in the average monthly revenue for the six major banks between the first nine months of 2001 and the last quarter,” Tucker said.
”It appears from information given to the council that the depreciation of the rand has had a severe negative impact on the banking industry as a whole.”
Tucker said although in the last quarter of 2001 the six largest banks earned an average of R8-million more revenue per month from trading in foreign exchange, interest derivatives and bonds than they did in the first nine months, the effect of the weaker rand on the ranking of South African banks had led to reduced access to and higher cost of credit internationally.
There had also been less dealing with off-shore parties.
Banks were also greatly affected by technology and information technology costs, which comprised a significant proportion of expenditure.
Tucker said according to data provided by the six major banks, an increase of R160-million for every R1 increase in the price of the US dollar was anticipated — an additional cost of R480-million in 2002.
He said the share prices of banks had also generally under-performed in relation to the JSE Securities Exchange all-share index.
The commission was set up after SA Chamber of Business chief executive Kevin Wakeford wrote a letter to President Thabo Mbeki last year after the currency lost nearly 40% of its value against the US dollar.
Wakeford said certain institutions and organisations had used dubious methods to enrich themselves from the currency’s fall.
However, the commission has been told by the SA Reserve Bank (SARB) and numerous witnesses that it would be virtually impossible to pinpoint any particular transaction that influenced the currency’s slide.
On Wednesday Finance Minister Trevor Manuel told the commission that Wakeford had never approached him with evidence of dubious transactions.
Manuel said had Wakeford done so he would have taken the matter seriously.
Wakeford has refused to comment on what was said, but will testify on April 2.
Factors mentioned by witnesses as contributing to the rand’s slide included negative investor sentiment about the volatile situation in Zimbabwe, the government’s stance on HIV/Aids, the September 11 attacks on the United States and the SARB’s fast reduction of the forward book.
On Tuesday Reserve Bank governor Tito Mboweni said the high capital outflow in the fourth quarter of 2001 significantly contributed to the rand’s behaviour in that period.
The Sandton-based commission, headed by senior Advocate John Myburgh, has adjourned until 10am on April 2. – Sapa
13