Top duo at banking giant a great team
They fight, but they end up in agreement
STANDARD Bank might have fallen short of analysts’ expectations for its half-year results, but splitting the CEO position between Sim Tshabalala and Ben Kruger has worked wonders, according to chairman Fred Phaswana.
When Tshabalala and Kruger were appointed in March as joint CEOs to replace Jacko Maree after he spent 13 years at the helm, some pundits were concerned that the overlap would hamstring the bank.
But Phaswana says the proof lies in this week’s results, the first under the new CEOs. “When you appoint certain CEOs you have certain expectations of them, particularly in this case where you have jointCEOs,” he told Business Times.
He said the board knew that Tshabalala and Kruger complemented each other, but it’s been even better than they expected. “Our assessment was exactly on the button,” he said.
It might seem extravagant praise, given that the half-year results were solid, but not exceptional.
Standard Bank’s earnings per share grew 10% to R5.06-billion — short of what analysts polled by Bloomberg expected.
The results illustrate the strain on consumers, as Standard Bank set aside 28% more cash to cover bad debt, while its return on equity fell to 13.8% from 14.3% during the previous period.
Investors weren’t thrilled either. Standard Bank’s share price fell 1.64% on the day of the results, a bigger drop than the other banking shares, showing again why analysts prefer FirstRand and Nedbank as their banking share picks.
But there were enough green shoots for Phaswana to feel confident that the joint CEOs were finding their feet.
Loan income rose 20% to R18.8-billion, for example, while the income from fees and commissions increased 7% to R17.7billion.
Other insiders say the chemistry between Tshabalala, a Rhodes University law graduate, and Kruger, a Pretoria University accounting graduate, has been good for the bank.
Peter Schlebusch, the head of the bank’s personal and business banking, said the two sang from the same hymn sheet.
Funeka Montjane, head of domestic personal and banking business, said the joint CEOs had a similar management style. “There is no confusion, we are clear how it works,” she said.
Tshabalala and Kruger echoed the sentiment.
Kruger said his leadership role was “clear and unambiguous”, and he enjoyed working with Tshabalala. And Tshabalala said: “It’s been gangbusters, and it’s only the beginning.”
To some extent, the bank has created separate kraals for each of them: Kruger heads personal, business, corporate and investment banking, while Tshalabala heads the foreign operations and the wealth business, including life assurance company Liberty Holdings.
They meet with Phaswana every two weeks, and the chair- man said he never had to mediate disagreements.
“When people said to us: ‘will they not fight?’, we say that they have been fighting all along, and every time they fought they came to an agreement on how to move forward,” he said.
Phaswana sees Kruger as the “money maker” who goes out to do things and Tshabalala as the “strategic mind”.
“So in terms of style and personality, there is really no reason or basis for them to fight. They complement each other,” said Phaswana.
His message is that time will tell if splitting the CEO role was the best decision.