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M&G Data Desk
09 Mar 2019 00:00
Despite the fact that shareholders have no power over Reserve Bank policy, ownership over the 2 million shares at the bank became the subject of a bitter battle at the ANC’s Nasrec elective conference in 2017. (Gallo Images)
Following President Cyril Ramaphosa clarification of his intentions to nationalise the South African Reserve Bank (SARB), the Mail & Guardian Data Desk decided to take a closer look at the current ownership.
The SARB has more than 700 shareholders spread across the world with the second highest number of shares in German hands. From illuminati theories, millionaire dreams and some who don’t even know they have shares, the central bank’s private owners are a mixed bag of shareholders.
“We have a situation where we have external shareholders.
This [changing ownership] has been done by a number of countries around the world.
Despite the fact that shareholders have no power over Reserve Bank policy, ownership over the 2 million shares at the bank became the subject of a bitter battle at the ANC’s Nasrec elective conference in 2017, resulting in a resolution that the bank should be nationalised. The Economic Freedom Fighters have also for years mooted their aspiration to change the law and allow for the nationalising of the bank.
At the bank’s annual general meeting last year, reserve bank governor Lesetja Kganyago noted that there are shareholders who also want the bank to be nationalised.
“They believe that they are entitled to a share of the assets of the SARB and see this as an opportunity to make enormous profits at the expense of taxpayers. This could turn out to be a protracted legal process and a very expensive exercise for what would, at best, be a cosmetic gain. To reiterate, whatever the shareholding structure, the primary mandate of the SARB will remain unchanged,” said Kganyago..
Shareholder dividends are limited to ten cents per year and the largest shareholder with 20 000 shares receives about R2 000 per year.
By analysing the Shareholders Index Report published monthly, the M&G Data Desk found that the highest number of shares belong to Capetonians at 114 320, followed by Germans who own 91 850 shares and then residents of Pretoria who own 52 186.
Of the 783 shareholders, 58 (8.2%) are foreigners, residing in countries such as Germany, Norway, Australia and the United Kingdom. Both Germany and the United Kingdom include the largest number of foreign shareholders with 16 residing in each.
“The Reserve Bank should be owned by the people of SA, not external shareholders,” Ramaphosa said this week.
The Reserve Bank’s spokesperson, Ziyanda Mtshali, said she could not speculate on the reason why someone from Norway would want to acquire shares in the bank.
“Although it (SARB Act) does not prohibit such shareholding, it prohibits any SARB shareholder who does not ordinarily reside in the RSA from voting at any meetings of the Bank,” she said.
The shareholder’s power does not extend to making any decisions on policy. When shareholders attend the annual general meetings they have the power to elect seven non-executive directors. At these meetings, they can also discuss the bank’s annual report and the auditors’ report.
Other than a breakdown of geographical location of shareholders, the M&G was also able to determine that the bank’s private shareholding is held by plastic manufacturing companies, agricultural groups, a widow and orphan organisation, professors, doctors and banks, amongst others.
At least four of the shareholders are farmers unions, such as Hertzogbrug Farmers Union and the Free State Agriculture Union. Agri South Africa owns 1 000 shares, a fact it wasn’t aware of before M&G reached out for comment. AgriSA’s Omri van Zyl said he didn’t know why the organisation would own shares.
“Pre 1994, having shares played a key role in monetary policy and the determination of prices as they weren’t dictated by the market. Those days it would’ve been important to be part of the Reserve Bank,” van Zyl said.
Pietman Roos, Head of Corporate Affairs and Communication at Agri SA, added that current private shareholding structure is purely ceremonial.
“Back in the day, they [the Reserve Bank] needed the capital. Over time it faded into a more ceremonial shareholding. What’s also important is that the Reserve Bank is really good in its transparency — it’s rated as one of the best in the world.”
In August last year, the EFF tabled an amendment to the SARB Act of 1989 to essentially nationalise the reserve bank and ensure its non-executive directors are appointed by the finance minister rather than shareholders.
Shareholders like Abdoolrawoof Ahmed from Lenasia agrees with Kganyago, that it would be wrong for people to demand a share in the country’s reserves, but he does hope one day that his 10 000 shares will score him a million rand if nationalising the bank happens.
“I got the shares a couple of years ago to educate myself and increase my knowledge about the bank and how it works. But as a shareholder, I have very little influence; so whether it’s nationalised or not, no one can actually get shares in the country’s reserves,” he said.
Professor Jannie Rossouw, head of the Witwatersrand School of Economic & Business Sciences, who also owns shares at the bank, said the powers of the shareholders of the central bank are limited to the point that nationalisation will not make a difference, but the most important aspect of the debate should be the autonomy of the bank.
Founded in 1921, the SARB has always had private shareholders. The Reserve Bank is one of eight in the world who have private shareholders, including Greece, Belgium, Japan, San Marino, Turkey, Italy and Switzerland.
The largest shareholder overall is the South African Mutual Life Assurance Society with a maximum of 20 000 shares. This is followed by the SA Police Widows’ & Orphans’ Fund which owns 10 520 shares and declined to comment. Another fund that owns 10 000 shares is the Crocodile Valley Provident Fund which was allegedly sold four years ago.
When the company that owned the fund, Crocodile Valley Citrus was contacted, an employee who did not want to provide his name said he did not know who owns the shares today.
Other notable entities include 30 trusts, 29 estates and three of the big four banks in the country — First Rand Bank, Standard Bank and ABSA.
The shareholder’s index refers to 35 people with the title of doctor and 5 with professors. A semi-retired chiropractor, Dr Roy Skinner, from Port Elizabeth said that curiosity drove him to buy shares 20 years ago.
“I’m a strong believer in the Illuminati of international finances and bought into the bank to get an idea of how the reserve bank works,” Skinner says.
Another professor who owns shares in the Reserve Bank is economics professor Raymond Parsons from North-West University. In 2004, Parsons was appointed to the non-executive board of the Reserve Bank by the then finance minister, Trevor Manuel, during which time he decided to buy shares.
The professor says he thought it appropriate to have a nominal stake in the institution on whose board he’s already serving. “It added an extra layer of transparency to see what information was being disseminated to shareholders, thus strengthening the due diligence role of non-executive directors.”
Parsons adds that although non-executive directors at the SARB have no say in monetary policy, they serve a valuable corporate oversight role over the bank’s affairs and act in a general corporate governance role.
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