Which central banks are actually listed?

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• Independent central banks as currency guardians
• Some central banks are listed
• Poorly profitable investments

Central banks are formally independent. That was not always the case. In the past, states deliberately influenced monetary policy. “Extensive empirical data and theoretical analyzes have shown that independent central banks are better able to keep the inflation rate low,” according to the European Central Bank’s website.

But even if central banks no longer necessarily pursue state goals, a large part of the international currency guardians is still in state hands. These include the Reserve Bank of India, which was nationalized in 1949. The Bank of England, which was a private institution until 1946, is also 100 percent state-owned – even though it operates largely politically independently. The committee members who make monthly interest rate decisions in the Bank of England are appointed by the British Chancellor of the Exchequer.

Some central banks have private shareholders

However, some central banks are also organized as public limited companies, in which private investors can buy shares and whose shares are publicly traded on the stock exchange. There are usually historical reasons for this, but it does not mean that central bank shareholders also have a say in the decision-making process monetary policy to have.

The Swiss National Bank SNB

The most prominent example is the Swiss National Bank SNB, which acts as a special-statutory public limited company under federal law.

Since the National Bank was founded in 1907, the shares have been listed on Swiss stock exchanges, and today the shares are traded on the SIX Swiss Exchange.

The bank is managed with the cooperation and supervision of the federal government in accordance with the provisions of the National Bank Act. Specifically, SNB shares are designed as registered shares: around 55 percent of the total share capital is in public hands. The Swiss cantons and cantonal banks in particular are shareholders of the institute. According to the National Bank, the remaining 45 percent of SNB shares are “largely owned by private individuals”. As a listed company, the SNB is subject to the regulations of the Swiss stock exchange that are binding for issuers and therefore regularly publishes interim reports to report on business developments.

The Swiss National Bank is functionally, financially and personally independent. The federal government itself does not own any shares.

The determination of profits is regulated in the National Bank Act: The National Bank forms provisions in order to be able to keep the currency reserves at the level required by monetary and exchange rate policy;

In principle, every investor from Switzerland or abroad is free to buy or sell shares in the SNB on the public market. Shareholders benefit from the development of earnings in the form of a dividend, which amounts to a maximum of six percent of the share capital. One third of the remaining profit goes to the Confederation and two thirds to the cantons.

However, the co-determination right of the shareholders is limited compared to that of other private corporations. The voting rights of private shareholders are limited to 100 votes, and a dividend of more than 15 francs per share is not possible.

The Bank of Greece

Another European national bank is listed on the stock exchange, the Bank of Greece. 100 percent of the share capital is in the hands of private shareholders, making it entirely privately owned.

The bank was founded in 1827, and three years later Bank of Greece shares were listed on the Athens Stock Exchange. By law, the state’s stake in the bank must not exceed 35 percent, so private investors hold the majority of shares at all times and can buy and sell their shares on the open market.

The share capital of the Bank of Greece is currently EUR 111,243,361.60 divided into 19,864,886 shares. In recent years, the Bank of Greece has regularly paid a dividend.

Like the SNB, the Bank of Greece is also independent and does not accept any instructions in fulfilling its duties as currency guardian. The Central Bank of Greece is a member of the European System of Central Banks.

Banque Nationale de Belgium

The third listed central bank is also in Europe, more precisely in Belgium. 50 percent of the shares in the Banque Nationale de Belgique are state-owned, the remaining 50 percent are distributed among private shareholders. 400,000 shares of the Belgian National Bank are in circulation, the 200,000 privately held shares are designed as registered shares or shares without securities and can be freely traded on Euronext in Brussels. According to the bank, apart from the Belgian state, no shareholder has a stake of more than five percent.

The National Bank of Belgium also distributes a dividend to its shareholders, which consists of two components. The first dividend is 6 percent of the share capital, plus a second dividend determined by the Council of Regency which has been set at “50 percent of the net proceeds of assets held as opposed to reserves (the “Regulatory Reserves”)”.

NBB shareholders’ rights, meanwhile, are limited compared to shareholders of other listed companies. The NBB sees itself as an “untypical joint-stock company”, since the National Bank’s listing on the stock exchange has primarily historical reasons, because it was launched by the legislature as a joint-stock company when it was founded in 1859.

For investors, this means that they are not allowed to have a say in the amount of profit to be distributed, nor approve the annual financial statements or have a say in the dismissals of incumbents. All these rights, which usually belong to the general meeting of shareholders, are exercised at NBB by the Council of Regency, made up of representatives from Belgium’s social and economic circles.

Japanese central bank

The Japanese central bank, the Bank of Japan, is also one of the listed central banks. The state holds the majority in this institute: 55 percent. The remaining 45 percent are in the hands of private shareholders. Unlike the SNB, the Bank of Greece and the Belgian National Bank, shares in the BoJ cannot be traded in Germany.

Bank of Japan shareholders do not receive dividends, nor do the shares carry voting rights. Bank profits, i.e. all net income, go directly to the state after deduction of taxes and expenses and are considered national property. According to its own statements, the BoJ is not a public company and does not hold any shareholders’ meetings.

It is considered to be independent in terms of currency policy and is therefore autonomous with regard to currency and money control, according to the currency guardian’s website. Government control over the central bank was severely restricted in 1998, particularly with regard to the state’s supervisory role.

Is a central bank investment worth it?

Against the background that the profit distributions of the listed national banks are non-existent or extremely manageable and shareholders also have hardly any rights of co-determination with regard to corporate policy, the question arises as to why investors should invest their money in central bank shares.

The investments are little or not profitable and just looking at the share price development, there are significantly more promising investment options on the market. Because central banks are not profit-oriented companies per se, so the usual standards for listed companies do not apply here.

A stock exchange listing of the central banks is usually a historically grown construct and probably has more of a symbolic character. In addition, shares of SNB & Co. are rarely traded, which makes the shares not liquid but potentially volatile investments.

Editorial office finanzen.net

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