Standard Bank ready with 10-step turnaround strategy
Construction on the Sun International Time Square casino and hotel development at Menlyn Maine, Tshwane, is on track. The casino is expected to open on time on April 1. The oval bar in the centre will serve only the filthy rich with the most expensive bottle of liquor going at about R1-million LIBERTY’s parent company Standard Bank is stepping in to assist the ailing life assurance business after it cost it R1.5-billion in headline earnings, wiping out gains made by the corporate and investment banking unit.
Speaking at the group’s results presentation on Thursday, Standard Bank joint CEO Sim Tshabalala said the group would be introducing a 10-step turnaround strategy to help the company.
While there has been a lot of concern about the company’s performance, Jason Weir, a trader at Bayhill Capital, said Liberty’s dividend of 691c a share was “respectable” and “shouldn’t go unnoticed”.
The group’s listing of Liberty Two Degrees and its real estate investment trust had a one-off effect on its headline earnings.
Weir said: “This is positive as it indicates a new direction and offering to clients.“However, he said, “its market timing and entry into the real estate investment trust sector, as a listed investment, could be questioned”.
The market has voiced concern about Liberty’s management and its performance.
But Tshabalala said that he and the rest of Liberty’s board had full confidence in the company’s leadership. “As a majority shareholder, we absolutely understand the importance of a turnaround plan in the short term and we’re supportive of management on their plans.”
Tshabalala said the group’s 10-step turnaround plan would include ensuring that sales momentum continued and the operational challenges were dealt with.
Brad Preston, chief investment officer at Mergence, said any recovery plan would most likely have a long-dated turnaround, but it would be a tough recovery.
“Liberty’s is a business that’s facing quite a few structural headwinds.”
Investors could take heart in knowing that Standard Bank had a strong track record when it comes to fixing leaks in its business units, Preston said. “You’ve got to give Standard Bank management credit that they have executed their plans on a number of operational issues within the underlying business units within the banking business.”
But he also pointed out that it was a lot easier for Standard Bank to “fix its own business than an outside investment”.
“Right now it’s hard to see them [Standard Bank] achieving success as they did with some of their banking operations,” said Preston.