Barclays Africa warns against changes to South African central bank mandate

PUBLISHED: Wed, 21 Jun 2017 10:43:29 GMT

JOHANNESBURG (Reuters) – Barclays Africa warned on Wednesday against proposed changes to the South Africa Reserve Bank’s primary mandate, saying amendments recommended by an anti-graft agency posed a “very serious risk” to the financial system.

The South African-based lender also said it would challenge in court a finding by the agency, published in a report this week, that Barclays had unduly benefited from an apartheid-era bailout.

Public Protector Busisiwe Mkhwebane, head of South Africa’s constitutionally-sanctioned anti-graft watchdog, called on Monday for the central bank’s mandate of maintaining currency and price stability to be changed to focus on economic growth.

“Her recommended amendments pose a very serious risk to the financial system and they cannot be allowed to stand,” Barclays Africa said in a statement.

The ruling African National Congress’s secretary general Gwede Mantashe and the central bank itself have also criticised Mkhwebane’s proposal, which has further stained South Africa’s image as an investor-friendly emerging market, coming less than a week after Mines Minister Mosebenzi Zwane spooked mining investors with a revised plan to revamp the sector’s black ownership rules.

Mkhwebane made her recommendation in a report by the agency, published on Monday, which also said the apartheid government breached the constitution by supplying Bankorp, which was acquired by Absa, now Barclays Africa, in 1992, with a series of bailouts from 1985 to 1995. She said Barclays Africa must pay 1.1 billion rand ($84 million).

Barclays Africa denied any wrongdoing.

“This is due to numerous misrepresentations and factual inaccuracies which form the basis of the Public Protector’s findings, and what we submit are the irrational and unreasonable legal conclusions in the report,” the bank said in its statement on Wednesday.

($1 = 13.0520 rand)

(Reporting by Tiisetso Motsoeneng; Editing by Christian Schmollinger and Susan Fenton)

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