The Big Read Still plenty of fight in the ‘boykie from Benoni’
Tough-talking Investec CEO Koseff won’t be hanging up his gloves
● A key rite of passage for a financial journalist was to be shouted at by Investec CEO Stephen Koseff. You knew before you went to press that a story was sure to get Koseff’s office phoning the next day. There would be some choice expletives and you’d be told you didn’t know what you were talking about. Annoyingly, he’d be at least partly right. It is simply not possible to know as much about Investec as Koseff does.
No one, from politicians to competitors, was immune from Koseff’s phone calls. And it extended into the bank too. The odd thing about those screaming fights is that they’d be coming from a good place. Koseff really cared deeply about Investec and, you realised over time, the country.
When he thought someone needed to be set straight, he could not help himself. The boykie from Benoni expected people to be able to take it.
At results presentations, Koseff would pick on journalists and analysts, quoting back something they’d written. Usually they’d got something wrong and Koseff would call them on it.
It was both humiliating and flattering. Flattering that he was paying attention to everything you wrote — humiliating that he’d call you on it publicly. But he’d do it to everyone and nobody felt victimised.
Last week Koseff, 66, announced his retirement from the bank he has been at for 40 years. He and Bernard Kantor, the Londonbased MD who has been in the trenches with Koseff from the start, will be stepping back from their roles in October. Glynn Burger, who has been with the bank almost as long, will step down as finance director six months later.
Koseff, though, is not hanging up his gloves. He has plenty of fight left in him. “Sometimes you want to jump in the fire and there are times I’m going to want to go fight with the government or something,” he told Business Times. “So I’ve got lots of fight left in me, I’ll just find other people to fight with.”
Over the past two years, Koseff has been increasingly vocal about the direction of the overall leadership of the country, and it’s clear he’s been thinking about it a lot. “I’ve never been that polite. But when Nenegate happened I thought ‘Oh my God’. Nene was a good minister and all of a sudden you see him replaced with a guy with no clue. Then the new guy goes off to Treasury with people who are advisers . . . Some people I knew.”
While business leaders have tended to stay quiet rather than engage politicians in the public sphere, Nenegate changed that for many. “Maybe I’d been a little vocal before Nenegate, but then I was mad. I felt business leadership were being too politically correct.”
But the shock also led to an unprecedented level of co-operation between business, labour and Pravin Gordhan’s ministry after he was appointed. Koseff is a key player in the CEO Initiative that grouped business leaders to try and deal with key challenges facing the country.
It was critical in reassuring international investors and ratings agencies that South Africa could avoid the trajectory on which the Nene decision seemed to have put it.
Koseff remains responsible for the employment commitments of the initiative, and is leading the Youth Employment Services Programme alongside Goldman Sachs South African CEO Colin Coleman, which aims to create 330 000 youth internships.
This is not the kind of social activism you might have expected from Koseff and his fellow Benoni boys when Investec was getting going. Then they would find doctors and accountants to lend to, usually small amounts. When Koseff arrived, there were eight employees. When it got its banking licence in 1980 it had just R1-million in capital.
Eight years later that had risen to R55million. Today it has 10 000 employees, equity of R36-billion and a R260-billion loan portfolio. It is a sprawling global business, with sizable operations in South Africa and the UK covering asset management and private and investment banking.
What was it like breaking into the South African banking market, dominated by a quartet of oligopolists? “We just picked our niches then said what do we need to do to dominate in those niches. It looks like an oligopoly from the outside, but I think South Africa is highly competitive.
“There are elements where we are the largest player, but in those there is lots of competition from larger and smaller banks. That’s why we were able to go into the rest of the world. We had very effective competition which made us a highly rated industry.”
Koseff’s obsession with detail can sometimes seem like micromanaging. But that’s not the way colleagues describe him. Instead you hear about the hours Koseff spends pacing the floors of the Sandton head office, stopping and talking with everyone as he goes, remembering them by name. Those chance conversations can lead to new jobs when an idea pops into his head or new connections can be made across silos.
The key to the influence Koseff wields in the bank is the tightrope between aggression and risk aversion. A bank has to grow, but it also has to manage its risk carefully. It is a problem that has tripped other bank leaders up when they fall for the hubris during good times and believe they can take much more aggressive market stances. Despite Investec’s reputation for aggressively competing where it can, Koseff kept the balance.
“When everything is firing and competitive, people push up the risk curve and everyone is going into your space, that’s where you have to pull back. It’s very frustrating for our people when you tell them they need to pull back. They have to make a living and meet budgets. But that’s how you manage this kind of business. You say you’re not doing this type of business.”
Certainly it has not always gone right. The financial crisis caused Investec a lot of pain when it was caught with large exposures to the UK residential mortgage market, thanks mostly to a business it bought months before the crisis broke.
But Koseff says with some pride that the bank worked through that patch without having to go cap-in-hand for rescue deals like many other UK banks did.
The business there had to be rebuilt almost from the ground up. There have been other tough patches, like forays into the US and Israel that didn’t pan out. But Koseff is standing down with the bank’s share price not far off its historic highs.He is going to remain involved, as is Kantor, with board positions on subsidiaries. Koseff says retirement just isn’t in his DNA. His social activism is likely to get more of his bandwidth, though he’s not going to set up any NGOs.
“I suppose I just shout from the sidelines. Occasionally I try and engage with the policymakers. As you mature you feel that you have to say something.”
Expect more ideas to take flight.
I’ve got lots of fight left in me, I’ll just find other people to fight with Stephen Koseff Outgoing Investec CEO