Standard Bank, which was founded almost 160 years ago, is looking beyond banking for new growth opportunities as it looks to become Africa’s premier diversified financial services group.
With a presence in 17 African markets beyond SA the bank’s recent buyout of Liberty minority shareholders will allow it to integrate the insurer’s short and long-term insurance products into its offering to tap new revenue streams on the rest of the continent. Add in asset manager Stanlib and the group has R1.4-trillion in assets under management (AUM), the third-largest in Africa after the Public Investment Corporation (PIC) and Ninety One.
“If you put these things together and you do it well throughout the continent, it’s formidable — that’s what we’re trying to do,” Standard Bank CEO Sim Tshabalala told Business Day on Friday after the group announced its annual results showing headline earnings grew 57% to R25bn in the year to end-December.
Standard Bank announced in July 2021 that it was looking to spend about R11bn to buy the about 46% of Liberty it did not already own. That would be as part of its ambition to create a pan-African financial services conglomerate offering everything from banking and asset management to insurance and wealth management.
Standard Bank had bought a controlling stake in 1999 from founder Donald Gordon. The insurer’s shareholders overwhelmingly approved the move in October 2021, with the group delisting at the beginning of March.
Potential customers
“We want to be able to lend to you [and] provide you with insurance and investments simultaneously. That’s the holy grail,” he says. “We want to leverage the banking and the insurance company and the asset manager’s capability and our footprint across Africa; the main footprint is that of the banking group.”
Standard Bank’s footprint across Africa gives it access to about 700-million people based on the combined populations of the markets where it has a direct on-the-ground presence. That excludes South Sudan and Ethiopia, where its activity is still in the development phase, but which could give it 126-million more potential customers to help bulk up fees and fatten margins.
“Lots of what we do as a bank is capital heavy ... we lend and then we have to hold lots of capital against the lending,” says Tshabalala. “We want more of the capital light revenues that arise from insurance and asset management.”
Standard Bank has said it will spend much of its 2022 financial year focused on integrating Liberty into its operations. As part of its results announcement on Friday it named former Liberty CEO David Munro as the executive in charge of integration.
A long-time Standard Bank veteran, Munro is the former head of its money-spinning corporate and investment banking (CIB) unit and knows the inner workings of the group intimately. Yuresh Maharaj, the former financial director of Liberty, succeeds Munro as CEO of the insurer, which delisted in March.
Joint force
“The first step is to get Liberty integrated ... get it aligned with the bankers, the insurers, the asset managers — that is what [Munro] is going to do,” says Tshabalala.
A big part of that task will be creating a joint sales force by integrating Liberty’s large tied sales force with that of the bank, something that will not be easy for an organisation that even Tshabalala admits is “in many respects quite bureaucratic”. Yet, he says the strategic rationale of the Liberty buyout works and he dismisses criticism of those who say the old bank-assurance model is outdated.
“We want to be integrated in our services offering. It improves the customer experience and it makes us more money, which is good for our shareholders,” says Tshabalala. “That’s the shortcoming of most bank assurance arrangements — it’s ... a set of disparate products ... and you’re not always serving the customer to the best of your ability.”
Update: March 13 2022
This story has been updated with additional information throughout.
With Karl Gernetzky
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