Charles Russon, the recently appointed head of Absa’s Corporate and Investment Bank (CIB), is having to juggle the separation of his business from Barclays Capital after it had been deeply integrated as a division of the British bank, while at the same time forging new partnerships to build out its franchise on the continent.
How is the separation from Barclays Capital proceeding?
We were a highly integrated business with Barclays Capital (Barcap). We tried to leverage their platforms as much as humanly possible when we were building it out at the outset. At the time it made sense because we were supporting a global client franchise.
So we knew it was going to be a massive piece of work to pull ourselves apart and it was going to take us three years to do it. We have one year left on this project. But it’s not just a case of “lifting and dropping” the systems from London in here. We wanted to change the client experience. So we have used this to try and innovate. But beyond that, we should be fully separated in a years’ time.
Are you calling this process of untangling yourself from Barclays more than a separation?
Yes, we are calling it a reset. We understand where we come from and what our strengths are. From a corporate and investment bank (CIB) point of view, the focus had to be around growth and our client franchise across the continent. We have no ambitions outside of the continent. Our ambition is to be an unashamedly Pan-African bank.
One of the first major decisions we took earlier in 2019 was to bring together CIB in SA with the CIB franchise on the rest of the continent. We wanted to make it a seamless experience for our clients and that meant removing internal silos.
Our fixed income, currencies and commodities (FICC), and financing activities were a key component part of our business under Barclays. But through the separation, we knew the large international element that Barcap brought to these businesses — its network of clients from around the world — would move away too.
So we need to replace that. We have begun creating our international corridors.
In 2018 we opened a London representative office (specifically to service global clients). Later in 2019 we anticipate opening a New York representative. This will facilitate flows from European and American clients that want to trade and invest on the continent. We will also have to look at Asia and the China corridor.
What do you think Barcap’s long-term influence has been on your business?
Our strengths became aligned with their strengths. So the trading and financing of fixed income, currencies and commodities (FICC) that was their strength, as was their lending business.
They also brought discipline into areas like finance, product control, risk management, and some of the best practice in those areas. It has provided us with the foundation to manage a business like this that we can take forward. But at the same time, because of their constraints, their appetite for emerging market risk wasn’t there and we can carve our own strategy now to build off what they gave us and that is to really service our clients into the African continent.
What will be different going forward?
We have a presence across a multitude of countries and we are a systemic bank in those countries. We want to be particularly strong in agriculture, natural resources, financial institutions, consumer and power and utilities. We want to continue to develop this deep sector expertise.
Following our agreement with SocGen, we can support their clients into the Anglophone countries where we have a presence, while they can help our clients with access into the Francophone countries. They are in 19 countries and we are in 12, we only overlap in three of them (Ghana, Mozambique and Kenya).
They also have a large presence with over 1,000 staff in China. We recently just held our first joint client event with them in Beijing, and I think it was a good starting point. But as some of the Chinese companies look to Africa, we want to partner with them and offer them the opportunities into the Anglophone countries.
Your chairperson Wendy Lucas-Bull indicated that developing a climate change policy was going to be a priority for the board. Is it a feature for investment bankers to think about in the future?
I think as Wendy summed it up, it’s a big part of the future and cannot be ignored. Sustainability in the financial sector is absolutely critical.
We have seen from offshore investors it is becoming a key criteria for investing, and I think we need to be at the leading edge of it — not only from a risk management perspective, understanding how our clients are exposed. But also taking a responsible position on where we lend and how we lend. We do need external thought leadership on this, as we strike a fine balance between addressing the risks associated with climate change on the one hand and the economic growth and sustainable development on the other hand.
We are the leading contributor to the growth of the renewable energy industry with about 40% of the projects under the SA REIPPP (renewable energy independent power producer programme). We anticipate there will be an enormous amount of innovation taking place.
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