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Johannesburg - Outspoken South African Reserve Bank (Sarb) shareholder Mario Pretorius says he will not give up a bid to alter the bank’s 89-year-old dividend policy, which he accused of paying its more than 600 private shareholders “peanuts”.
“For 89 years, we have been getting the same dividends and our shares are now worthless because of inflation. All the private shareholders are paid a total dividend of R200?000 a year. This amount is half of the governor’s (Gill Marcus) monthly salary. Even if you double the dividends, this would still be peanuts.”
Pretorius spoke to City Press after Marcus this week refused once again to entertain a demand by a group of private shareholders who want the central bank to pay 10% of its yearly profit or distribute a portion of its R9.2bn capital to all shareholders.
At an annual general meeting (AGM), Marcus told the private shareholders that the central bank would not entertain the demand by the group of shareholders led by Pretorius and German national Michael Duerr.
Pretorius, who is the chief executive of telecoms firm TeleMasters, said the shareholders, representing 12% of the Reserve Bank’s investor base, would approach finance minister Pravin Gordhan or Parliament next year to persuade them to change the dividend policy.
“Everyone is getting an increase, including the governor. Why can’t we get an increase? We don’t have to be paid millions of rands. The bank is giving 10% of profits to the government, but it is giving us nothing,” said Pretorius.
However, Marcus made it clear to the private shareholders that she would not budge and told them that section 24 of the Reserve Bank Act stipulated that they be paid a fixed dividend of 10% per share a year and nothing more.
She said: “All shareholders, irrespective of when they bought their shares, were aware of, or should have been aware of, this legally imposed limit to the earnings per share.”
Marcus also told the private shareholders that the Reserve Bank was not legally bound to distribute the R9.2bn reserve to private shareholders, neither was it bound to pay 10% of its yearly profits to them.
“The sheer scale of this reserve indicates how ridiculous this demand is. The bank stands firmly opposed to entertaining any such demand, from whatever quarter,” she said.
She added that the central bank was not a profit-driven institution and its duty was to act in the interest of the South African economy.
About 90% of the central bank’s yearly profits are paid over to the state, while the remaining 10% is used to accumulate the bank’s capital reserves.
Pretorius said he was receiving a dividend of 10c a share for the 9?800 shares he held in the bank.
Journalists had expected fireworks at the AGM after Duerr had threatened an “all-out war” in May against the bank following amendments to the Reserve Bank Act, a move that further strengthened the bank’s independence and weakened the influence of private shareholders. Duerr, however, failed to show up at the AGM.
