Government is ready to establish a state bank, Finance Minister Tito Mboweni said on Wednesday.<\/p>\n
\u201cIn July 2019, I tasked the Deputy Minister of Finance with the responsibility to undertake the state bank project\u2026 I am pleased to inform the House that preferred options for the establishment of a bank are now ready,\u201d he said in Parliament, as he tabled the 2020 Budget Speech.<\/p>\n
The Minister\u2019s comments come after Parliament last year passed legislation to allow state-owned enterprises to apply for banking licenses.<\/p>\n
The architecture of the proposed bank will be that of a retail bank operating on commercial principles.<\/p>\n
The bank will be subjected to the Banks Act, and will have an appropriate capital structure and performance parameters on investments and loan impairments.<\/p>\n
\u201cIt will be regulated by the Prudential Authority on its own merits. We will also consolidate the currently fragmented system of national and provincial Development Finance Institutions,\u201d he said.<\/p>\n
The PA is responsible for regulating banks, insurers, cooperative financial institutions, financial conglomerates and certain market infrastructures.<\/p>\n
SA Sovereign Wealth Fund<\/strong><\/p>\n Meanwhile, Mboweni also announced the formation of the South African Sovereign Wealth Fund.<\/p>\n The fund is an important long-term tool for saving and investment for future generations.<\/p>\n \u201cToday, we announce the formation of the South African Sovereign Wealth Fund with a target capital amount of about R30 billion, which converts to about US$2 billion or so. Given the legal, administrative and procedural issues involved, a relevant bill will be submitted during the course of this Parliament,\u201d he said.<\/p>\n He said the fund could also contribute to strengthening the fiscal framework, and could also play an important role as a counter-cyclical fiscal tool.<\/p>\n The Minister said there are a variety of possible funding sources, such as the proceeds of spectrum allocation, petroleum, gas or minerals rights royalties, the sale of non-core assets, and future fiscal surpluses, among others.<\/p>\n \u201cThis will ensure that we continue to invest in the future generations of this country in a fiscally-prudent manner,\u201d he said.<\/p>\n
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