4 Global Central Banks You Can Actually Buy Shares In

Direct investment in a central bank like the U.S. Federal Reserve may sound like a dream, but for some global investors it’s a reality.

dollar bills being printed

Imagine running a bank that helped set industry regulation, exercised control over the interest rates that influence borrower behavior, or even controlled the supply of money in circulation with the flick of a switch. You’d imagine that to be a fairly profitable institution, right? Well you’d be correct.

The thought exercise above describes central banks, like the U.S. Federal Reserve system which generated nearly $89 billion in profits last year. If the Fed was a privately run company it would have been the most profitable company on the planet according to Fortune’s Global 500 List for 2020.

While you can’t invest directly in the Fed, you can invest in a handful of central banks that exert similar influence over the fiscal policies of their national governments.

Central Bank Shares that You Can Actually Buy
Unlike commercial banks, which are owned by public shareholders, nearly all central banks are branches of their national governments. As such, investors have no ability to sit side-by-side with these profit powerhouses. However, there are a few central banks that do have publicly-traded shares, including the Swiss National Bank (Schweizerische Nationalbank), the Bank of Japan (日本銀行), the Bank of Greece (Τράπεζα της Ελλάδος) and the National Bank of Belgium  (Banque nationale de Belgique).

These publicly-traded central banks can produce immense profits just like their government-owned peers. The Swiss National Bank (SWS: SNBN) produced $23 billion in profits last year, while the Bank of Japan (TSE: 8301) generated net income of $15 billion in its most recently completed fiscal year. Smaller central banks like the National Bank of Belgium (ENXTBR: BNB), with $983 million in profits, and the Bank of Greece (ASTE: TELL), with net income of $789 million, were no slouches either. And central banks are highly unlikely to go bankrupt.

Stock price performance can be both dull and exciting. The Bank of Japan’s price nearly tripled in 2013, then steadily slid by 70% until doubling earlier this year. Shares of the Swiss National Bank were flat from 2011 to mid-2016, then surged 6x over the next two years, but have been relatively tame ever since.

Like becoming king, buying shares of a central bank is not always easy and comes with caveats. Trading volumes can be low and the shares typically trade only on their in-country stock exchanges. Dividends may be scarce. The Swiss National Bank’s shares have a dividend yield of about 0.3%, although the National Bank of Belgium’s shares currently yield 4.5%. Also, shareholders may hold very limited or no voting rights.

For investors willing to put up with the inconveniences, owning shares of a central bank can provide financial rewards and the feeling of being, on paper at least, among the most powerful investors in the world.

When you’re investing in banks and financials, how important is dividend yield to you?

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