FirstRand’s Lau­rie Dip­pe­naar to leave the field

Last of the found­ing tri­umvi­rate to de­part

Sunday Times - - BUSINESS TIMES - By STU­ART THEOBALD Theobald, a former ed­i­tor of In­vestors Monthly, is chair­man of In­tel­lidex.

At an event a decade ago, Gwede Man­tashe, who had re­cently been ap­pointed ANC sec­re­tary-gen­eral, an­nounced that he be­lieved the banks and mines should be at least 50% gov­ern­ment-owned.

A hand went up in the au­di­to­rium. “Run­ning a bank is hard,” said the speaker. “When things go wrong you have to fund them. And find­ing ways to com­pete is hard work. If you’re the gov­ern­ment, why don’t you just tax them in­stead? You’d get all of the up­side but none of the headaches.”

I don’t re­mem­ber Man­tashe’s an­swer, but the ques­tion stayed in my mem­ory. It was asked by Lau­rie Dip­pe­naar, and in its sim­plic­ity it be­trayed a deep un­der­stand­ing of the re­la­tion­ship of the pri­vate and pub­lic sec­tors. It was clas­sic Dip­pe­naar, analysing com­plex prob­lems by ask­ing sim­ple ques­tions.

Last week he an­nounced his re­tire­ment as chair­man of FirstRand. When he steps down in March next year it will be the first time in the group’s his­tory that nei­ther the CEO nor chair­man’s of­fice will be oc­cu­pied by one of its three founders.

He will join GT Fer­reira and Paul Har­ris in re­tire­ment, al­though Har­ris main­tains a nonex­ec­u­tive board po­si­tion. The three of them formed Rand Con­sol­i­dated Investing in 1977, es­tab­lish­ing FirstRand from that and other en­ti­ties in 1998.

Dip­pe­naar is renowned for his metic­u­lous prepa­ra­tion for board meet­ings. He takes his sim­ple ques­tion­ing to the board­room, cut­ting through the of­ten ar­cane jar­gon of high fi­nance, get­ting ex­ec­u­tives to ex­plain their busi­ness plans in the most ba­sic terms.

“He hates bull­shit,” says one of his longserv­ing col­leagues. “He al­ways makes peo­ple sim­plify things. He makes them go through that in­tel­lec­tual process. It can be hum­bling but it’s very valu­able.”

He also loves anal­ogy, a way of find­ing mean­ing in what can be ob­scure.

Three years ago he asked my firm to re­search black em­pow­er­ment deals. He’d be­come frus­trated with what he saw as a lack of in­for­ma­tion in the de­bates around BEE. He said he’d fund it per­son­ally but wanted no say in the re­search method­ol­ogy, which he in­sisted be in­de­pen­dent. When we pro­duced re­sults, hav­ing cal­cu­lated the value BEE deals had cre­ated, he was not sat­is­fied. “Are those big or small?” he asked. “What could you buy for that amount?” He grasped one of the find­ings in our re­port. “That’s the value of farm­land in South Africa. With that money you could buy all of the farm­land.” And so our num­bers were brought down to earth, to some­thing that meant some­thing to or­di­nary peo­ple.

Sys­tem in­tegrity

Dip­pe­naar car­ries a trait that is highly de­sir­able in a leader of a bank­ing group: an un­der­stand­ing of the bal­ance be­tween en­trepreneur­ship and risk-tak­ing on the one hand, and the so­cial obli­ga­tions that banks have on the other. Banks are fun­da­men­tal in­sti­tu­tions in the econ­omy with deep re­spon­si­bil­i­ties to main­tain the in­tegrity of the sys­tem. It has struck me how South Africa’s bank­ing lead­ers grasp this, yet their in­ter­na­tional coun­ter­parts clearly did not when the global fi­nan­cial cri­sis struck.

When it came to res­cu­ing African Bank in 2015, FirstRand played a crit­i­cal role in round­ing up the rest of the bank­ing sec­tor to form part of the con­sor­tium to re­cap­i­talise the failed bank. FirstRand was there, too, when Saam­bou hit the wall, craft­ing a deal with the gov­ern­ment to bail out de­pos­i­tors. Dip­pe­naar’s un­der­stand­ing of the re­spon­si­bil­ity all banks have to main­tain the in­tegrity of the sys­tem has shone through.

En­trepreneur­ship

In FirstRand’s tri­umvi­rate of founders, Fer­reira was the deep-think­ing strate­gist, Har­ris the op­por­tunist and Dip­pe­naar the goal­keeper, en­sur­ing FirstRand held the line on

He hates bull­shit. He makes peo­ple sim­plify things Dip­pe­naar col­league

its cor­po­rate gov­er­nance and so­cial re­spon­si­bil­i­ties. He was also the long­est serv­ing, as the ini­tial CEO of FirstRand un­til 2005, hand­ing over to Har­ris, then re­turn­ing in 2008 as chair­man.

De­spite his per­va­sive in­flu­ence on the group, he’s not in­ter­fered with the CEOs who fol­lowed him, in­clud­ing Har­ris, Sizwe Nx­as­ana and cur­rent in­cum­bent Jo­han Burger.

Dip­pe­naar has a pro­found be­lief in the value of en­trepreneur­ship as a force for good in so­ci­ety. He drove an entrepreneurial cul­ture in the bank, giv­ing lead­ers au­ton­omy and re­sources, but then hold­ing them re­spon­si­ble for per­for­mance.

He backed new ideas like OUT­surance and Dis­cov­ery, the lat­ter af­ter Adrian Gore couldn’t get his then-em­ployer Lib­erty to sup­port it in the early 1990s.

Ed­u­ca­tion

The plan for his suc­ces­sor matched the route Dip­pe­naar fol­lowed. Nx­as­ana was meant to take on the chair­man­ship af­ter a few years cool­ing off from the CEO’s of­fice, where he’d also dis­played mag­is­te­rial in­sight into the in­ter­sec­tion of banks and broader so­ci­ety. But Nx­as­ana has been drawn deeply into tack­ling South Africa’s ed­u­ca­tion cri­sis, chair­ing the Na­tional Stu­dent Fi­nan­cial Aid Scheme, the Na­tional Ed­u­ca­tion Col­lab­o­ra­tion Trust and var­i­ous other ed­u­ca­tion ven­tures mar­ry­ing en­trepreneur­ship and so­cial re­spon­si­bil­ity. That has ab­sorbed him, so long-stand­ing board mem­ber Roger Jar­dine will take on the role in­stead, step­ping down as CEO of Pri­me­dia to fo­cus full time on the role.

Dip­pe­naar re­mains a ma­jor share­holder in FirstRand via Rand Mer­chant Bank Hold­ings, of which he is still a di­rec­tor. From there, his in­flu­ence may oc­ca­sion­ally still be felt. He will no doubt re­main ac­tive; his pas­sion for ed­u­ca­tion may even lead him back to work­ing along­side Nx­as­ana.

Pic­ture: Martin Rhodes

FirstRand vet­er­ans, from left, Paul Har­ris, GT Fer­reira , Sizwe Nx­as­ana and Lau­rie Dip­pe­naar. Dip­pe­naar, who re­tires as chair­man in March next year, Har­ris and Fer­reira founded Rand Con­sol­i­dated Investing in 1977, out of which FirstRand was es­tab­lished.

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