The first 365 days

‘Go­ing for­ward I’ll be more in­volved in the de­bates and de­ci­sions rather than ask­ing ques­tions’

Finweek English Edition - - Business strategy - BY DAVID MAKOVAH Di­rec­tor of Bridg­ing Con­cepts Fi­nan­cial Ser­vices

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

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