It was reported recently that the Reserve Bank lost nearly R1bn on its stake in African Bank.
In terms of the Reserve Bank Act 90 of 1989 [3] the objectives of the bank in the exercise of its powers and the performance of its duties the Bank shall pursue as its primary objectives monetary stability and balanced economic growth in the Republic, and in order to achieve those objectives the Bank shall influence the total monetary demand in the economy through the exercise of control over the money supply and over the availability of credit. Presumably the Reserve Bank was trying to stabilise African Bank. [10.(1)(d)] The Bank may acquire shares in a limited company formed and registered in accordance with the provisions of the Companies Act, 1973, if the Board is of the opinion that any such acquisition will be conducive to the attainment of any of the objects of this Act. Fair enough.
So, if the EFF would like to nationalise the Reserve Bank, who are the current owners. Well, that is not that easy to tell.
[4.] The Bank is managed by a board of fourteen directors, consisting of a Governor, three Deputy Governors (of whom one shall be designated by the State President as Senior Deputy Governor) and three other directors appointed by the State President, and seven directors elected by the shareholders. [21.] The share capital of the Bank is two million rand, and is divided into two million ordinary shares of one rand each. The Bank may, from time to time, with the consent of the Board, increase its ·share capital by the issue of shares upon such terms as the Board may approve.[22.] No shareholder shall hold more than 10 000 shares in the Bank. So where does the money go? [24.] Of the surplus (if any) remaining at the end of a financial year of the Bank after provision has been made for bad and doubtful debts, depreciation in assets etc. the payment to the shareholders, out of net profits, of a dividend at the rate of ten per cent per annum on the paid-up share capital of the Bank, one tenth shall be allocated to the reserve fund of the Bank and nine tenths shall be paid to the Government.
Currently payment to shareholders would be distributed to about 800 individuals, trusts and companies. Whilst the Act makes information very secretive [33.] No director, officer or employee of the Bank, and no officer in the Department of Finance, shall disclose to any person, except to the Minister or the Director-General: Finance or for the purpose of the performance of his duties or the exercise of his functions or when required to do so before a court of law or under any law, any information relating to the affairs of the Bank or a shareholder or customer of the Bank acquired in the performance of his duties or the exercise of his functions, or any other information acquired by him in the course of his participation in the activities of the Bank. In fact you can find out online who at least some of the shareholders are. Why would you be a shareholder if the government gets most of the money. According to the dailyinvestor.com “the reason to be a shareholder of the Reserve Bank is not for financial gain but rather to get invited to the Annual General Meeting (AGM) of the SARB.”
Losing R1bn on African Bank doesn’t make too much difference to the shareholders, but we met that Julius would not have been pleased had it been nationalised.
