Liberty, once one of the five largest shares on the JSE, could soon be delisted. For years Standard Bank has denied any plans to buy out the minority shareholding in Liberty Holdings. But there was also a time when Old Mutual said it would never list as, in the words of former chair Mike Levett, mutuality was “in our DNA”.
The resignation of Roy Andersen as Liberty CEO in 2003 was a turning point, when Liberty lost its independence. He was replaced by Standard Bank’s leading merchant banker, Myles Ruck. It seems a curiosity now that under Liberty founder Donny Gordon the then Liberty Life was perceived to own the bank, not the other way around. Liberty certainly had a more colourful creative team than the somewhat bland and austere Standard Bank of the 1980s and 1990s. Roy McAlpine, for example, at Liberty Asset Management, was the most high-profile fund manager in SA. Few journalists, let alone members of the public, could name anyone at Standard Bank’s somewhat lacklustre fund management arm.
Similarly, Yves D’Halluin and his protégé, Gavin Came, built up SA’s best insurance sales force with almost messianic zeal. A former CEO of Liberty quipped to me, only semi joking, that half the sales talent at Liberty has now moved to Discovery and the other half overseas. Discovery CEO Adrian Gore is a Liberty alumnus, though he dismisses the urban legend that he left only because Gordon turned down his plans to set up a medical aid unit. Gordon and Gore are very much peas in a pod as entrepreneurs in a slow-moving, conservative industry.
Steve Handler, a key member of the inner circle, proved that even actuaries could be creative. Gordon did not take much pleasure out of the relationship with Standard Bank. It was a marriage of convenience. He needed the bank’s help to buy back control from Guardian Royal Exchange, Liberty’s London-based parent company.
Gordon argued that banks and life assurers had incompatible cultures. Banks think, at best, three years ahead but usually no more than three months ahead, while life offices have a 40 year horizon, perhaps longer. He wouldn’t be able to deny that the Standard Bank/Liberty bancassurance relationship has worked better than the Old Mutual/Nedbank relationship. Standard Bank gives Liberty a huge amount of business in credit life, parcelled with its loans, though the margin for Liberty is tiny. Nedbank by contrast runs its own credit life business and passed nothing to its then parent, Old Mutual.
Liberty and Standard Bank considered a merger back in 2001. The main attraction then was that it would enable Standard Bank to swallow up Liberty’s substantial excess capital. They did merge the two asset managers and linked product platforms into Stanlib. which provided scale, though Ruck would complain at every occasion at the high rental cost of Stanlib’s plush new digs in Melrose Arch, a smart Johannesburg precinct. Stanlib has been an inconsistent performer when it comes to investment returns, but at least has been quite a dependable profit centre, particularly with its large unit trust book.
By now Liberty is a separate business in name only. The bank turned down the opportunity to appoint independent-minded former Capital Alliance boss Ian Kirk as Liberty’s CEO when Ruck left, instead appointing another Standard Bank insider, Bruce Hemphill. There was a brief interregnum after Hemphill with the former head of Old Mutual group schemes Thabo Dloti in charge, but then the bank felt more comfortable with its own appointment, David Munro, like Ruck the former head of merchant banking. No reputable analyst has ever questioned the competence of the Standard Bank insiders who ran Liberty — the bank has a strong bench of intelligent, capable executives. But it is clear where their loyalties ultimately lie. Some did not even grasp that liability in insurance means something completely different from what it does in banking, for instance.
There is no reason now not to rename Liberty Life as Standard Life and Stanlib as Standard Investments. There was a large life office in Edinburgh called Standard Life — it was once far larger than Old Mutual, for example. But it has been busily imploding, and it is highly unlikely that anyone would now confuse the two. The Scottish Standard Life was much ridiculed recently when it renamed its fund manager Abrdn, making the clunky Stanlib brand sound compelling.
I wouldn’t blame Standard Bank for wanting to draw a line on Liberty’s many lacklustre years. But the bank must take some of the blame for its decline. It has not encouraged new ideas, letting it fall behind Discovery, the most obvious competitor in Liberty’s Johannesburg northern suburbs heartland. And Liberty has also fallen behind Momentum, which Gordon no doubt would have once dismissed as an obscure life office in Pretoria.
Perhaps under the bank’s control Liberty can finally make a success of the mass market. It has made several attempts but still has a negligible market share. Maybe the surplus staff at Standard Bank’s branches can be retrained to sell Liberty’s group schemes.
• Cranston is a Financial Mail associate editor.
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