No concern over Marcus’s future

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Rene Vollgraaff

IT IS less than three months to go until Gill Marcus’s term expires as Reserve Bank governor, with no word on whether she will remain in her post. Yet investors are not panicking.

Marcus, who turned 65 this month, will end her five-year term on November 8. While President Jacob Zuma has not given any indication on whether he will replace her, investors have faith that if she goes, one of her experienced deputies – Daniel Mminele or Lesetja Kganyago – will take up the reins.

“I don’t think the market is terribly worried because they see the people under her as really quite competent,” Nazmeera Moola, an economist and strategist at Investec Asset Management, said. “Provided they change to one of the deputy governors, there would not be concern.”

Marcus, a former deputy finance minister and Absa chairwoman, took office in 2009 after the global financial crisis hit. The meltdown dragged the local economy into its first recession in 17 years and pushed up inflation.

Her appointment was announced weeks after Zuma was elected as leader, dogged by corruption allegations and investor concern that he would push for looser fiscal controls.

Marcus has helped steer the economy through the turmoil, providing stability to monetary policy, which has become a hallmark of her term. During the time that she has led the monetary policy committee, the repo rate has been adjusted just six times compared with 17 in the previous five years.

The next governor, whether it is Marcus or not, will need to contain the fallout from the collapse of African Bank.

The central bank stepped in this month to save the lender after its parent’s share price plunged 95 percent. Moody’s Investors Service downgraded South Africa’s four biggest lenders last week, adding to speculation that the sovereign credit rating may be cut.

“There are no special reasons why we should be anticipating a change in the governorship,” Razia Khan at Standard Chartered Bank in London said last week.

“With the Reserve Bank’s institutional strength well established, this is less of a risk event for markets”, she said.

Marcus said in June that the renewal of her contract had not yet been discussed with Zuma. Mac Maharaj, the spokesman for the president, said last week that the matter was still under consideration.

Mminele, 49, was appointed for a second five-year term as deputy governor last month. Kganyago, 48, joined the central bank in May 2011 after more than seven years as director-general of the National Treasury. The Reserve Bank does not have a mandated retirement age. – Bloomberg


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