the small - scale entrepreneur and the rural operators. “ furthermore, the range of financial institutions and instruments is narrow. public ownership of financial institutions is pervasive. institutions are plagued by a large proportion of non - performing loans in their portfolios. management lacks the relevant management skills. financial market depth and breadth is still very limited. ” reforms in these developing countries have focused on improving the legal, regulatory, supervisory and judiciary environment, reducing financial repression, restoring bank soundness, rehabilitating financial infrastructure, and have included programmes designed to downsize publicly - owned banks, privatising them where possible and encouraging new entrants. thirdly, reference can be made to financial sector reforms in the emerging economies of the world. in these countries some stage of advancement has already been reached in the development of financial systems. however, new demands are now being made in light of a new global financial environment, characterised by a liberalisation of financial markets, an integration of major global markets and an exposure of individual countries to relatively large international capital movements. in these countries, exchange controls have been or are being removed, multinational financial institutions, including banks, are granted unrestricted entry, and international rules for financial regulation and supervision are being introduced that must be complied with to the satisfaction of international investors. domestic monetary policy objectives must be brought to terms with the requirements of international market operators, and governments must accept some eroding of their sovereign autonomy for the management of the national economy. 2. financial sector reforms in south africa south africa is part of the latter group of countries. together with the major social and political reforms of the past few years, we also had to contend with some important restructuring of the financial system. firstly, the south african financial sector, not unlike other countries on the african continent, had to adapt to the changes in the socio - political environment. provision was made in the banking legislation for the existence and continuation of numerous informal savings clubs ( “ stokvels ” ) operating outside the normal constraints of bank regulation and supervision, but also then, of course, without access to central bank accommodation at the discount window. new legislation to provide for communal ownership of a banking institution was introduced in the form of the mutual banks act. south african banking institutions also adopted their own internal policies to provide for greater participation in the social upliftment programmes of the country. secondly, bank regulation and supervision underwent major changes over the past ten years to apply the world - wide supported directives of

- stretched during this period of structural change and rapid expansion in the financial markets. 4. mercantile bank and financial sector reforms in south africa the mercantile lisbon bank holdings group has been and continues to be part of the financial sector adjustment process in south africa. with a substantial shareholding by the banco national ultramarino of portugal, mercantile is firmly linked to the expanding international participation in south africa. furthermore, this association brings to mercantile bank the experience of portugal ’ s largest commercial bank in its participation in the structural financial adjustment of a country that is preparing itself for the major reforms demanded of prospective participants in the european union ’ s integrated financial system and common euro currency. south africa obviously has a great interest in these developments now taking place in europe. our recent successful negotiations for qualified access to the lome convention provide proof of the importance attached to our future relations with the european union. the supportive role of portugal in these negotiations was appreciated. we believe that portugal will be able to comply with the maastricht requirements for full participation in the first round of economic and monetary union scheduled for 1 january 1999, and will therefore also continue to carry south africa ’ s interests into the european union. mercantile bank has also been part of the domestic south african financial sector reforms in recent years. since the acquisition in 1994 of central registrars, the operations of the two companies were gradually integrated. the changes in the operations of the johannesburg stock exchange last year had a significant impact on mercantile registrars, and its contribution to the non - interest income of the group had increased considerably with the larger volumes traded on the jse. finally, mercantile bank is also expanding its interests to other african countries, for example mozambique, and is therefore taking up the challenge of greater financial cooperation in the sadc region. i can only wish you well in your future operations, and may this new building contribute to your future successes, in the interest of the development of a sound and wellmanaged banking sector in south africa.