As CEO of Investec Bank Plc, Ruth Leas leads the division that houses the group’s non-Southern African lending operations in the UK, the US, the Channel Islands, India and Ireland. Having spent 24 years in various roles with Investec since joining in 1998, her first year as CEO of Investec’s UK banking operations from November 2019, proved to be one of the most challenging, due to the advent of Covid-19.
Less than four months after her appointment, the UK went into its first lockdown and the group entered a strategic review to streamline its business. Business Day sat down with SA-born Leas, who holds an honours degree in economics from Wits and a Masters from Cambridge, to discuss her role.
Investec has made it clear it wants to grow its UK business where it is still a relatively small player. What is the bank’s long-term growth strategy there?
Investec came to the UK 30 years ago and today we are the ninth-largest banking group by revenue in this market. Our long-term strategic objective is to be the leading bank in the midmarket in the UK, and to be ranked in the top five in all our areas of activity. We’re uniquely positioned in the midmarket where we are the only bank providing a combined offering across the personal and business journeys of our target clients, including private banking, wealth management, corporate banking and investment banking.
Shortly after you were appointed CEO of Investec Plc the bank launched a restructuring premised on simplifying the business. Can you explain what this entailed and what it plans to achieve?
The reorganisation of the UK bank aimed at streamlining the business was set out by the group in 2019, to unlock value and position Investec for long-term growth. The simplification process involved integration across our operations within the bank and placing clients at the centre of how we’re organised, removing silos and enabling cross-collaboration throughout the entire banking business. This integration led to a number of redundancies in our London office and we also took a very difficult decision to exit Australia. This gave us the ability to concentrate our capital allocation and growth in the UK, while being internationally connected to our clients in other geographies such as the US and Europe.
How do UK clients differ from those in SA and, more importantly, how do they view Investec — which is still an SA-born bank — versus home-grown British offerings?
At an overarching level, certain target markets that we focus on here in the UK are broadly similar to those of our SA bank. It’s important to note that the balance sheets of Investec in the UK and SA have to be run separately due to regulatory requirements. Most of the clients in the UK are not South African and Investec is viewed as an innovative, reputable partner in the UK market providing a differentiated offering relative to the British home-grown alternatives. The midmarket space is particularly underserviced by the bulge bracket banks.
What client trends are you seeing in the UK banking market?
Clients in our target market are looking for a partner who will see them through the highs and lows of the economic cycles and support them through challenging conditions, while providing competitive solutions and pricing in stronger markets. In the private client high-net-worth area, we continue to win business from our competitors as clients gravitate towards our differentiated service offering. SMEs [small and medium enterprises] and smaller corporates in the UK are also looking for a highly relationship-orientated and service-focused offering, which they cannot get from the High Street banks. Private equity clients continue to seek funding albeit at slightly lower levels, in a difficult market where various institutions, as well as US banks, have reduced funding to this space. There continues to be good demand for strong corporate credits while funding has dried up for marginal borrowers.
What’s it like being a woman — and particularly an SA woman — working in the UK banking sector, which is still rather male-dominated?
I’ve been in London for 20 years, so I’m both a South African and a British woman, but it doesn’t make a significant difference. I’ve found London to be very welcoming to immigrants and it’s easy to fit in when so many people come to London from various different countries given it is one of the main financial centres of the world. The finance industry has been male-dominated for generations, leading to what has become an entrenched bias that males are most suitable and capable for leading roles in banking. Very often when a woman is appointed into a senior position, many people will comment that it was a “diversity hire”. As more women continue to prove they can be successful in CEO roles, this bias or learnt belief will change.
As an economist by trade you’re not the typical CA (SA) CEO that normally rises through the ranks in SA firms. How have you managed to rise to the top in the banking sector typically riddled with bean counters?
It’s interesting that accountancy or business degrees are not necessarily the most common university studies of CEOs and other business leaders in the UK. There is a more varied approach to academic studies with a broader range of subjects read at university in the UK. School and university gave me an excellent foundation of knowledge and helped to develop my analytical thinking.
However, in banking, most learning is done “on the job”. I describe banking as an apprenticeship, the best way to develop and succeed is by learning from the people around you: spending time learning from your colleagues, problem-solving together to find the best solutions for clients, and, importantly, building strong relationships. Investec has a very entrepreneurial mindset, and while the original founders of Investec have moved on, we still operate with a “founder mentality”.
There’s a lot of trust and freedom to operate as long as there is appropriate performance. I embraced this early at Investec, and took on the challenges along the way. Successful CEOs today need a very broad range of skills, not only the technical skills one learns from one’s academic studies. In addition to these technical skills, being able to work with, understand, lead, empathise with and motivate people are very important attributes.
The UK has experienced a lot of political turmoil of late while the economic outlook is also rather uncertain given rising energy costs and the war in Ukraine, not to mention the implications of Brexit that are still being felt. How has this affected the UK banking market and Investec in particular?
While it’s been a particularly challenging period for the UK, the banking market has navigated through this relatively well. Regulated banks are in good shape following 14 years of constantly increasing regulatory requirements since the GFC [global financial crisis], meaning established banks like ourselves have strong capital and liquidity and good leverage ratios. We, like other banks, benefit in general from rising interest rates, while having a diversified loan book will help to shield from defaults that may result at some time in the future from persistently high borrowing rates.
What is your sense of the macroeconomic outlook in the UK over the next year or so and how will that affect Investec’s operations?
The UK economy is subject to a number of challenges which are common to other developed countries in the northern hemisphere, including inflation at four-decade highs, an energy crisis and rising interest rates. Geopolitical uncertainty is of concern, stemming from the war in Ukraine, strained relations between the US and China, trends moving away from globalisation and the rise of nationalism.
[UK Prime Minister] Rishi Sunak appears determined to ensure that public finances are brought onto a sustainable path once again. While this may mean businesses will face higher taxation, markets have been stabilised and longer-term borrowing costs have come down which is important to secure a stable business environment. While the UK economy is slowing, a critical point is that banks are well-capitalised, liquid and supplying credit to the economy, which should hopefully mean that any recession is not likely to be a deep one. At Investec, we remain cautiously optimistic and well-prepared for volatile market conditions should they arise.
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