As Nedcor prepares to stage a recovery after the departure of CEO Richard Laubscher, it might help to point out that some of the solutions to its problem lie in mastering the basics. The first step should be to reposition its flagship banking brand, Nedbank.
I fell in love with Nedbank as a student in the mid-Nineties, when it was a bank for ”people who are serious about money”. It ran a radio ad declaring that it did not offer 18-year-olds silly prizes or club memberships, but intelligent financial advice. That captured my heart and made me aspire to be one of Nedbank’s clients. I was also drawn by its support of the arts and sport through affinity products.
Then, last year, I fell out of love with the bank when it launched its ”Who are those people?” campaign. This held up obscene opulence as desirable. The aspiration to prosperity was dragged to the choking extreme of being part of a blithely ignorant oligarchy.
The challenge now is to regain the right tone in addressing the upwardly mobile. But Nedcor’s woes run deeper than this, and commentators agree that Tom Boardman has a sceptical market to tame while stabilising a R300-billion financial services empire. Boardman came into the Nedcor fold after the acquisition of BoE . He was then put in charge of retail banking. Just over a year later, he finds himself the man at the top.
Among the first things he said after his appointment was that ”[Nedcor] is a great bank with great people”, meaning that he must rethink Nedcor’s exposure to the IT sector in particular, and non-core assets in general. Two weeks ago the group sold its stake in London-listed Didata for R350-million. This, for an investment once worth R7,2-billion. Tony Routledge, an executive director at Nedcor, told Finance Week: ”We made a mistake with Didata.”
Routledge now notes that Nedcor will have to review investments like the 31,7% it holds of electronic procurement company Miraculum, 74,9% of Indian software firm Nihlent Technologies and 26,1% of smart-card manufacturer Aplitec. Routledge maintains that any sale will be conducted ”when the timing is appropriate”.
Boardman also told the Financial Mail he believes that the bank must ”renegotiate” some of its alliances, including the Go Banking franchise with retail giant Pick ‘n Pay, as these are not profitable.
He appears unfazed by the baptism of fire he received after his appointment last week, when the Nedcor share price slumped 6%. His stint at BoE seems to have prepared him for the challenge.
Most importantly, Boardman contends that Nedcor’s IT infrastructure has given it world-class processing quality that has ”gone too far and disconnected from good, old-fashioned customer services”. He’s right about that.