The first 365 days
‘Going forward I’ll be more involved in the debates and decisions rather than asking questions’
SIZWE NXASANA, CEO of FirstRand Bank, is a man being closely watched as a role model and inspiration for young black entrepreneurs gaining traction in the financial services industry and also by the investment community as the first African head of one of South Africa’s Big Four banks.
According to Nxasana, his first year as CEO has progressed extremely well and exceeded even his own expectations. While there was the obvious learning curve of getting to know more intimately the operations of the business, he asserts pointedly that “the key drivers are there and you don’t have the luxury of familiarising yourself without making a contribution”.
With regard to prospects ahead he paints a bullish and assertive picture. “Going forward I’ll be more involved in the debates and decisions rather than asking questions.”
At the pinnacle of the FirstRand Group is its formidable founding trio: GT Ferreira, Laurie Dipenaar and Paul Harris. I put it to Nxasana that it must be a very delicate position he’s in, coming as an outsider (albeit despite his previous position as a non-executive director of FirstRand), to head a business housing a massive portion of the founding members’ wealth while all three are still involved in the business to varying degrees.
Unperturbed, he describes his interaction with all three as having “actually worked amazingly well”. This he attributes to the relationships being “open and transparent”, with everyone playing a role in supporting the goals of the organisation and, as a result, his “responsibility as CEO of FirstRand Bank is quite clear”.
He candidly picks off the major issues affecting the bank and the South African economy in general: FirstRand, via Rand Merchant Bank, is eminently poised to profit from the current private equity activity in SA. That will be achieved by leveraging off its ability to structure, advise, arrange and also participate in the funding. That holistic approach to providing a full suite of merchant banking services is one of the factors inform- ing the formation of the Investment Banking Group at FirstRand where all these services, including private equity, will be offered under one roof.
Nxasana doesn’t share the concerns from some quarters on the level of foreign involvement in these private equity deals. In fact, he sees it as a natural and inevitable evolution as well managed, highly cash generative and low-geared SA companies come to the attention of large private equity players.
On the bank’s African footprint he’s resolute that it’s being rolled out on sound commercial and economic principles. And the expansions into Africa to date have proven very profitable due to that approach.
As at SA’s other major banks there seems to be uneasiness at FirstRand concerning the Competition Commission’s enquiry into bank charges. It hasn’t only subjected the banks to increased scrutiny but there’s also attached to this issue some tender social and political sensitivities.
Citing the higher interest rate margins enjoyed in some European countries as
Nxasana’s record for entrepreneurship, adaptability and substantive
delivery speaks for itself.
enabling them to offer free retail transactional banking, Nxasana argues that applying the same model in SA could simply result in charging consumers higher interest rates, with possibly a zero net effect for all parties at the end of the day.
As a consumer I’d gladly opt for no bank charges and supposedly higher interest rates. Bank charges are stealthy and difficult to monitor. However, it’s simple to choose the most favourable interest rate between competing banks.
Concerning FirstRand’s proposal to scrap the Saswitch fees that received so much flak from its competitors, Nxasana insists that the proposal asked the Competition Commission to facilitate such a move, as the banks couldn’t act in that manner without falling foul of the Competition Act and being accused of collusion.
Telkom blazed a trail in nurturing black SMEs in the procurement process during Nxasana’s time at the helm. And while FirstRand has to date met its Financial Sector Charter obligations, he’s keen to add that there’s room for improvement. There’s a gen- eration of yuppie black entrepreneurs who will continue to monitor this matter closely.
A so-called “bank analyst” I chatted to recently expressed scepticism concerning Nxasana’s lack of banking experience. The analyst is wrong. And investors in his fund will suffer accordingly. Nxasana’s record for entrepreneurship, adaptability and substantive delivery speaks for itself: from setting up the first black-owned auditing firm in SA to transforming Telkom – with no previous telecommunications experience – into the cash belching, New York Stock Exchange listed juggernaut that it is today.
He’s enjoying his new role and is on top of the job. As his influence and tentacles spread throughout FirstRand, any sceptic would be well advised to use as a litmus test the bank’s individual investors. Demanding taskmasters that they are, it’s unquestionable that in Nxasana they have the confidence that their nest egg will not only be preserved but will also undoubtedly grow.
* A transcript of the interview with Nxasana is available on www.fin24.co.za
Role model for young black entrepreneurs. Sizwe Nxasana