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Refocus is the name of the game

09 March 2006 Angelo Coppola

Africa is OK, SA is great, internationally not so lekker, but plans are in place to fix the international business, says Ben Kruger as chief executive of Corporate & Investment Banking at Standard Bank says that 2005 was an interesting year.

The domestic operations had a good year, although margins did come under pressure in South Africa. He says there were good performances in various areas, including structured debt, equity derivatives, property finance, Custody and electronic banking.

While the rest of Africa showed a strong growth in revenue, especially in foreign exchange income while costs went up due to investment in IT and infrastructure.

Looking further a-field to their international operations, revenue was down 4% and costs are up 11%, in US dollar terms. He is disappointed with the numbers.

He responded to the allegations that they (the bank) had taken their eye off the SA market, saying that while they did apply their minds to the under-performing international business, the local clients and business didnt suffer.

Internationally the mistake seems to be a bad call on the sustainability of the growth in the emerging markets sector. They unwound their exposure in the emerging market sector early in 2005, while their competitors reaped the benefits of the continued growth.

There was an increased tax charge, due to a ruling in the UK towards the end of 1999, and there was also the detrimental effect of the Dextra case and ruling in the UK.

Other costs came from increased staff numbers and the incentives structure which was also been modified to attract a higher quality of staff, with retention plans in place.

Kruger maintains that they are in the right markets but they do need to increase the scale of operations. The London international head office is now a bigger business, and well managed, although there are business process issues, and increased costs of operating in the UK.

There is no lack of customers. The plan is to reduce the number of counter parties and reduce the number of counties in which they operate. Kruger calls it a refocus. They have trading locations in eight countries, represented in 21 countries. Its about the 150 countries that transactions are done in. We cant do that.

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