9B14C027
NEDBANK: TRANSFORMATIONAL LEADERSHIP IN SUSTAINABLE
TURNAROUND
Dr. Caren Scheepers, Jabu Maphalala and Chantel van der Westhuizen wrote this case solely to provide material for class
discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may
have disguised certain names and other identifying information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the
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Copyright © 2014, Richard Ivey School of Business Foundation
Version: 2014-06-18
On July 10, 2013, at 6:00 p.m., Mike Brown1 took a deep breath of the crisp evening air. He admired the
shades of pink and orange on the western horizon that marked the end of another day in his 25 year career
in banking, most of which had been spent at Nedbank Group Limited (Nedbank).2 Nedbank was an
authorized financial services provider in South Africa and other African countries, offering wholesale and
retail banking services, insurance, asset management and wealth management; its headquarters were in
Sandton, South Africa, Africa’s largest financial centre. The high-rise buildings over the Johannesburg
skyline gave him a sense of satisfaction as he made his way towards the Gordon Institute of Business
Science (GIBS)3 in Illovo for his presentation at the GIBS Forum, an event organized for business
executives to share best practices and gain further understanding of the fast-paced business environment.4
Brown felt privileged to be presenting at the GIBS Forum as the chief executive officer (CEO) of a
financial services organization that had existed for 180 years. Nonetheless, the sense of responsibility
rested heavily on his shoulders: he was determined to prevent another disaster such as the one Nedbank
experienced in 2003, to sustain financial growth and to maintain momentum and progress in the
company’s culture change. In 2013, Nedbank was one of the four largest banks in South Africa, measured
by assets, with six million customers, a market capitalization of R90 billion,5 assets of R680 billion, a
tangible net asset value growth of 11.3 per cent, R7.5 billion profit, headline earnings growth of 21.4 per
cent, 750 regional branches and 28,748 staff members with four to five dependents in each household (see
Exhibit 1).6
Brown reflected on his tenure at Nedbank, hoping that he would be judged by whether he had created a
sustainably more successful organization than the one he inherited and that the next CEO could build on
what he left behind.7 He smiled to himself when he thought of the 150 business people who had come to
listen to his presentation; bankers were expected to be boring unless they were involved in some kind of
scandal. He felt relieved that he was able to announce that evening that dividends paid to shareholders
totalled R6 billion and tax paid to the South African government was R3.4 billion; he could boast about
the enormous influence that his bank had on society as, although it was the smallest of the big four South
African banks, it had been named by EuroMoney8 as the “Best South African Bank for 2012” and the
only “Carbon Neutral Bank in Africa.”9
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Brown reflected on how far Nedbank had come since the heady days following its incorporation of BoE10
in 2002. BoE, formerly known as the Board of Executors, was established as a trust company in Cape
Town in 1838. Its focus was on the private high-net-worth sector. (It and Fairbairn Private Bank were
consolidated under the new brand of Nedbank Private Wealth in 2012.) Brown and his predecessor, Tom
Boardman, had been senior executives at BoE and, following the merger, had been appointed chief
financial officer (CFO) and CEO respectively at Nedbank. Brown’s presentation at the Forum was
focused on the processes that they had initiated during that period, the resulting performance and a look
into the future.
Brown thought about how he would explain the challenging periods at Nedbank: first, when an
unsuccessful attempt was made to acquire Standard Bank in 199911 and second in 2003 when 12.8 per
cent of the workforce was retrenched.12 In 2004, the market capitalization was only R17 billion, and due
to low capital liquidity, Nedbank was under threat of losing its banking licence. As a result, Boardman,
Brown and their executive team were given the opportunity to turn the organization around. They
changed the name to Nedbank Group Limited from Nedcor Limited a year after they embarked on this
journey. Brown hoped that the audience would comprehend the importance of the three focus areas in the
turnaround strategy, namely, vision, culture and measurement.
Brown looked forward to sharing with his audience the news that Nedbank was currently the “Sustainable
Bank of the Year, Middle East and Africa” according to the Financial Times.13 Nedbank had the second
best performing South African banking stock on a total shareholder return basis and, according to the
Department of Trade and Industry’s (DTI) codes, for several years had been the most transformed bank of
the 50 top companies on the Johannesburg Stock Exchange (JSE), with a broad-based black economic
empowerment (BBBEE) rating of Level 2.14
BACKGROUND OF NEDBANK’S TURNAROUND15
The Nederlandsche Bank en Credietvereeniging voor Zuid-Africa (NBCV) was founded in 1888. It was
established as a South African banking company in 1951 and consequently changed its name to
Nederlandsche Bank en Credietvereeniging voor South Africa (NBSA). By 1967, its South African
shareholding had increased to 100 per cent, making it a fully owned South African bank. The name of the
bank was changed to Nedcor Limited (Nedcor) in 1992.
The combination of South Africa’s pre-1994 racially discriminatory government policies and the
international social, economic and political isolation caused by the resulting global sanctions16 created an
environment in which South African companies, such as Nedcor, were shielded from international
competition. Consequently, many businesses became internally focused and diversified into non-core
sectors as a viable growth strategy. The end of Apartheid resulted in the lifting of international sanctions
and allowed South Africa’s re-entry into the international business community. However, in 1994, the
country’s GDP was approximately 1.1 per cent.17 The provision of basic needs to the majority of the
population was insufficient.
The new government introduced a number of laws to address the effects of Apartheid, namely, the Labour
Relations Act (Act 66, 1995),18 the Basic Conditions of Employment Act (Act 75, 1997)19 and the
Employment Equity Act (Act 55, 1998),20 all of which were aimed at empowering workers in the
workplace. The push for greater and more visible black economic participation resulted in the formation
of the Black Economic Empowerment (BEE) Commission, followed by the Broad-based Black Economic
Empowerment (BBBEE) Commission in 2003.21 A number of industry charters aligned with the
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government’s policies of a more inclusive economic environment. The Charter of the Financial Services
sector came into effect in January 2004,22 affecting the 40 banks, including branches of foreign and
mutual banks, registered with the Office of the Registrar of Banks of South Africa. The banking
institutions collectively employed 115,734 workers at 8,438 branches and agencies.23
Four major groups — the Amalgamated Banks of South Africa Group Limited (ABSA), Standard Bank
Investment Corporation Limited (Standard Bank), FirstRand Holdings Limited (FirstRand) and Nedcor
(renamed Nedbank in 2005) — dominated the banking sector in 2004. They maintained extensive
networks throughout the country and collectively held over 80 per cent of the total assets of the banking
sector.24 Of these, Nedcor, with a market capitalization of just R17 billion, was the smallest. In 2001, just
three years earlier, Nedcor had been the second largest bank in South Africa with a market capitalization
of over R40 billion.25
Strategic Investment Issues
Historically, Nedbank had played the role of innovation leader in the South African banking sector. For
instance, the NBSA, as the company had been known in the late twentieth century, was the first bank to
introduce computerized banking services in 1964 and the first to pay interest on current accounts in 1983.
Due to the anticipated convergence of banking and technology in the late 1980s, Nedcor invested heavily
in Dimension Data26 (also called Didata), a leading information technology (IT) company. One of the
consequences of the size of this investment was that the Technology and Operations Division became the
largest and most powerful division within the group. As a result, the bank’s branches typically had two
branch managers: one for Technology and Operations and the other for Sales and Marketing. This led to
confusion, as the two managers did not coordinate their activities well. The influence of the Technology
and Operations division as well as the complex structure made it difficult to assign accountability and
subsequently led to the neglect of core banking clients. Dimension Data cost Nedcor R1 billion between
2001 and 2003.27
Nedcor responded to the volatility of the rand by adopting interest rate hedging. This strategy proved to
be flawed as the large foreign currency positioning caused great losses. To conceal these losses, those
responsible submitted to aggressive accounting, that is, accounting for bad debts by recognizing them late
in the cycle, resulting in a false impression of good financial health.
Nedcor contracted the services of a major consulting company to assess the profitability of its clients. The
consulting company produced a report that suggested that certain customer segments were not profitable.
In response, the bank management focused on the limited number of customers perceived to be profitable.
Possibly as part of this strategy, Nedcor created the largest private bank in South Africa through the late
1990s merger of Nedbank Private Bank and Syfrets Private Bank.
Necor’s Permanent Bank divided in 1995 into Permanent Bank and People’s Bank. People’s Bank
focused on the less affluent clientele. This market segmentation strategy led to the creation of different
brands, which had their own individual corporate cultures. Nedcor effectively became a house of brands.
Nedcor grew both organically and through mergers and acquisitions. It launched an unsolicited bid for
Standard Bank, its bigger rival, in 1999. The bid was unsuccessful. Nedcor’s market capitalization was
larger than Standard Bank’s, although, without the Dimension Data investment, it was actually smaller.
At one stage, one-third of Nedcor’s market capitalization was its investment in Dimension Data.28
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After creating the largest private bank in the country, Nedcor’s Permanent Bank merged with Old Mutual
Bank in 2001. The last major merger was the acquisition of the BoE Bank in 2002 (see Exhibit 2).
Structural and Cultural Issues
During this time, Nedcor had a complicated matrix structure, which made it difficult to pinpoint
accountability. Issues included a short-term profitability focus and hedges that delivered on the short
term. When the business environment became tougher, the bank’s managers became noticeably more
authoritarian.
Professor Rosabeth Moss Kanter from Harvard warned in 2003 that during difficult times, organizational
pathologies — secrecy, blame, isolation, avoidance, passivity and feelings of helplessness — can arise.29
At Nedcor, people blamed one another for and were intolerant of bad news, which was hidden until it
became a much larger problem. Softer costs were harder to measure and more difficult to resolve; for
instance, the low morale due to the retrenchment of 12.8 per cent of the staff had a negative impact on
service delivery. The low risk taking culture had a negative impact on innovation practices, as staff was
too fearful of making mistakes. News of the lackluster performance of the company also had an impact on
relationships with clients. In certain cases, the first couple of minutes at sales meetings were spent on
discussing issues at the organization before they moved on to sales related matters.
TURNAROUND PLAN
When Boardman was appointed as CEO of Nedcor in 2003, he had his work cut out for him, but he had
previously overcome setbacks in his career that prepared him for this challenge.30 The new group was
made up of Nedcor, BoE, Nedcor Investment Bank and the Cape of Good Hope Bank. They all had
different incentive schemes and therefore required a complete review of the principles that supported
them.31
Boardman had to come up with a strategy immediately to address these pressing issues. Market sentiment
on his suitability for the job was also negative: Nedcor’s share price dropped 6 per cent the day after the
announcement of his appointment was made.32 On the operational side, Nedcor’s headline earnings in
2003 were down 98 per cent to R55 million.33
Boardman quickly realized that corporate strategy and operations, corporate culture and corporate
leadership had to be reviewed and reinvented if the fortunes of the formerly second largest bank in South
Africa were to be turned around.34 Early in 2004, he presented his board of directors with a plan of five
points and persuaded the parent company, Old Mutual plc, to inject R2 billion of secondary capital into
the bank. His five-point plan was to:





reconstitute the executive committee
deliver on the BoE merger
improve customer service and provide shareholders a return on investment
improve the company’s capital position
consolidate all brands into one brand.
This plan was “actually not a plan, but a plan to make a plan,” which developed into a well-thought-out
turnaround plan.35 The organization was renamed Nedbank in 2005.
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Vision
Boardman was influenced by the best-selling business book, Good to Great by Jim Collins36 and often
quoted from it. Boardman’s executive team envisioned Nedbank becoming “Southern Africa’s most
highly rated and respected bank” by its staff, clients, shareholders, regulators and communities. The
cascading of these five stakeholder groups was deliberate. Focus was firstly on staff, as an inspired,
energized and aligned staff force would deliver superior service to customers and this would affect how
shareholders, regulators and communities would view the bank.
Nedbank was the only bank with regulators in its vision as one of its stakeholders. It complied with Basel
III regulations on open and transparent reporting.37 Learning from the past, management minimized risk
with regards to interest rates, unsecured lending and foreign currency.
Nedbank’s turnaround required a change in the way its people operated.38 In 2004, Boardman personally
led strategy, values and brand (SVB) workshops for the senior leadership of the bank to brainstorm
strategic direction, corporate aspirations, key focus areas and core values. Most managers attended
dialogue workshops called “Leading for Deep Green” with their teams.39 These opportunities enabled
staff to contribute and therefore co-create the strategy and values of the brand. They discussed issues such
as “What does a successful South Africa look like in 2030?” and “How can we make our products align to
a green economy?” Nedbank ultimately aligned this aspiration to the government’s National Development
Plan, and the “Community Fair Share 2030”40 project was born.41
In 2005, Nedbank became the first African bank to adopt the Equator Principles, an international
voluntary framework aimed at ensuring a consistent approach to managing environmental and social risks
in project finance.42 Boardman also introduced the “Talk to Tom” concept, a vehicle for employees to
directly share with him their concerns and suggestions without fear of being victimized by their
immediate superiors. Summaries of the discussions from the SVB workshops were presented to, and
approved by, the Nedbank Group Executive Committee to develop a group strategy and clear direction for
the group brand campaign. All staff members were invited to provide input in selecting the fifth value as
this represented buy‐in into the shifting of the corporate culture. The outcome was the “people-centred”
value.
To address emerging pressing and immediate issues that had to be dealt with quickly in order to fully
carry out the vision, Boardman’s executive team launched the “Journey Back to the Top” initiative.
Pinned by a three-year planning process, this initiative was meant to provide focus for initiatives aimed at
the turnaround of Nedbank (see Exhibit 2).
Measurement
As part of the process, each business division, all executives and every employee were actively tracked
and measured against a balanced scorecard, which included value creating, risk management and
transformation. In 2008, a special focus was placed on customers: the Net Promoter Score measured
service delivery, meaning that the lowest score customers provided was deducted from the highest
score.43 A turnaround office was created to monitor progress on the strategic recovery.
The key foundations of the journey were depicted in a one-page illustration of the “Deep Green” vision
and strategy document. Called the “Dagwood” (see Exhibit 3) after a feature in the “Blondie” comics,44
the document had multiple layers flanked by two “sandwiches” — vision-led and values-driven
statements.45 This one-pager was very powerful in communicating the turnaround strategy. Between 2004
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and 2006, the strategy was generally inward-looking and focused on recovery as part of the “Journey
Back to the Top.” As a listed company, Nedbank was committed to detailed financial reporting, and a
great amount of information, such as the daily highest, lowest, closing share prices and trading volumes,
was made available in the public domain.46
Culture
Boardman set out to embed the new culture in the organization by ensuring that values were adopted,
accepted and lived by all employees, especially top executives.47 Nedbank invested more in personal
mastery and leadership development than any other corporation in South Africa.48
The Richard Barrett culture survey was introduced in 2005, the same year that the holding company
changed its name from Nedcor to Nedbank. The “Eyethu” BBBEE deal, dubbed “the first truly broadbased BEE deal,” whose beneficiaries included “tens of thousands of stakeholders,” including the
organization’s own employees, was also launched in 2005.49
The Barrett survey provided a score indicating the degree of “cultural entropy” in the system. Barrett
defines cultural entropy as the proportion of energy in an organization or any human system that is
consumed by nonproductive activities such as bureaucracy, internal competition, empire building and so
forth.50 The results of this survey indicated that Nedbank’s “entropy” level was at 25 per cent, a very high
score and an indication of an unhealthy organization.
Since 2005, the number of staff who responded to the survey increased from 1,827 to 21,629, indicating
that they believed that management took culture seriously.51 There was significant improvement in the
culture of the organization as measured by the top 20 values, of which only six were negative ones, such
as bureaucracy, blaming, silo mentality, etc. In 2012, “Accountability” had been the number one value in
Nedbank for four consecutive years. The survey also indicated the number of matches between the current
and desired culture: five of the top 10 values matched. The higher the number of matches, the happier
staff was in the organization. At 10 per cent entropy, Nedbank was seen as a highly healthy functioning
organization.
Instead of paying attention to specific groups of customers or being a niche bank, the strategy changed to
being “a bank for all.” To this end, Nedbank initiated a massive increase from 350 branches in 2004 to
543 in 2010 and 758 in 2012, as well as 760 branded outlets, such as personal loan kiosks. ATM’s
increased from under 2,000 to 3,048, a 70 per cent increase at a cost of R1.5 billion.52 Customers grew
from 4.8 million to 6 million. Nedbank also started focusing on mass marketing its services. In 2007, it
announced its first mass market sponsorship, the Nedbank Cup in the Premier Soccer League.53
Leadership Towards Sustainability
To achieve its vision of becoming “Southern Africa’s most highly rated and respected bank” for
communities, Nedbank’s top leadership perceived business as not separate from society and therefore as
having to play a role in sustainability. Nedbank was awarded recognition as the only carbon neutral bank
in Africa.54 Its staff were challenged to contribute to economic reorganization and to participate in
projects of community development. One of the key advantages of this thrust was its positive effect on
team building and staff morale. In over 20 years, Nedbank raised more than R100 million through a trust
called, “The Green Trust” where money was donated in support of Nedbank’s aspirations as an
environmentally responsible corporate citizen.55
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Nedbank viewed environmental sustainability as integrated with economic sustainability. The executive
team financed deals that promoted environmental sustainability, such as renewable energy deals. The
bank also bought credits from the World Wild Life organization. It became the first financial services
organization in Africa to achieve carbon neutrality in 2010. From 2011 to 2012, Nedbank’s overall
greenhouse gas emissions increased by only 3.83 per cent year-on-year.56
The results of the 2012 Carbon and Sustainability Awareness Survey indicated that 98 per cent of
employees felt that Nedbank was a responsible and proactive corporate citizen, committed to enhancing
sustainability awareness and addressing climate change through its lending practices and within its
operations. The Nedbank Capital Sustainable Business Award was an innovative commitment to “green”
business and social and economic relevance. Nedbank awarded the 2013 Sustainability Leadership Award
to Marius Swanepoel, CEO of Imperial Logistics.
Nedbank took its advocacy role within society seriously. Realizing that a transformation effort would
only succeed once there was true buy-in, executives conducted an enormous number of road shows that
emphasized the business imperative for transformation. For instance, in terms of the growth in client base,
the number of black customers grew from one million, or one-third, to 3.7 million, or nearly two-thirds at
63 per cent. Nedbank’s transformation journey was inspired by 10 transformation truths (see Exhibit 4).
These initiatives paid off, as mentioned in the introduction to the case. In 2012, Nedbank had the best
track record in eight measures of the BBBEE scorecard and was consecutively first in seven of the eight
indicators since 2004.57 That same year, 63 per cent of Nedbank’s 28,748 staff members were women.
The 2012 SA Women in Leadership census conducted by the Business Women’s Association of South
Africa, and sponsored by Nedbank, revealed that only five of the largest (by market capitalization)
companies on the JSE had 25 per cent or more director positions held by women. One of those companies
was Nedbank.
Boardman retired in 2010 and was replaced by Brown as CEO. Brown gave Boardman the credit for
taking Nedbank along the “Journey Back to the Top” and promised to sustain his predecessor’s initiatives
and progress. For instance, Brown introduced the “Talk to Mike” blog, where he personally responded to
any staff member’s questions.58
Brown pondered on the culture of distrust and fear that had contributed to the lack of an innovative
culture within the organization before the start of the turnaround strategy; it had taken a long time to
reverse it. He encouraged innovation by setting an example and creating “My financial life,” an
application (app) that aggregated information on assets, trusts, insurance and any other financial data.59
Other technological innovations included the “pocketPOS,” which enabled customers such as artisans to
make electronic payments wherever they were.60 He was grateful that more executives at Nedbank were
leading by example and coming up with new product ideas and that the “innovation mojo” was starting to
gain momentum.
Even within this technology strategy, Nedbank focused on long-term sustainability values; for instance, it
built a secure digital highway that was agile and where apps could be dropped and often updated. An app
that was tailored for each mobile phone type could be great in the short term, but might create
unnecessary complexity in the long term. Coming to market with a secure app into which it was easy to
drop ongoing innovations was an essential component of this new feature.
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CHALLENGES AHEAD
As Brown approached the GIBS auditorium, he considered the challenges ahead for Nedbank. Most
certainly, he would mention the company’s innovation drive and expansion plans. Nedbank was lagging
behind its competitors with regards to African expansion; for instance, Standard Bank had a presence in
19 African countries and was the only South African bank with a retail and corporate banking footprint in
high-growth Nigeria; First National Bank had businesses in seven African countries; and Barclays Africa,
previously ABSA, had 10 African operations.61 Penetrating markets in Central and West Africa was
difficult, and so Nedbank had followed a partnership model, for example, by allying with Ecobank
Transnational Incorporated (ETI)62 and sharing clients. About 60 of Nedbank’s corporate clients used
ETI’s transactional services in over 20 countries. From November 2013, a window would open for
Nedbank to exercise the subscription rights to 20 per cent of ETI, obtained when Nedbank had advanced
its partner a US$285 million loan. A first subscription right was at US$.11 per share. Nedbank also had a
second subscription right that in effect was an antidilutive clause. It functioned like an anti-dilutive
provision clause, entitling Nedbank to raise its stake to up to 20 per cent.63
The strategy in Southern and East African markets that were closer to home — Swaziland, Lesotho,
Namibia, Botswana and Malawi — was to build franchises. Nedbank bought a 36 per cent stake in Banco
Unico, a Mozambique bank, that could transition to a control stake of 70 per cent.
Another problem that Brown was contemplating was how to maintain the momentum of culture change.
To this end, he was planning a culture Lekgotla64 on August 5 and 6, 2013 in which the top 300 managers
would discuss the organization’s current culture and how to derive more value for customers from the
effort with culture. As a strategy, Nedbank also had to consider how to capitalize on being part of the Old
Mutual Group. Reflecting the turnaround, the previous strategy of “Back to the Top” was changed to
“Growing to Greatness,” reflecting the growth strategy.65
It was not clear who would win the convergence race between banks and telecommunications companies
(telcos); however, banks were in a better position to provide security. The economic situation in South
Africa with a 2 per cent GDP growth and all-time high job losses66 did not suggest an overly positive
forecast. Corporations and individuals were not likely to overspend. Nedbank was strongly capitalized
and liquid. It had a common equity tier of 11.8 per cent and surplus liquidity of R25 billion. The
challenge would be to sustain these financial results within a global economic meltdown that still did not
seem to have reached its end.
South Africa’s regulatory framework was still evolving; although leveling the playing field, the
accumulative effect of legislation was unclear. In uncertain times, a corporate bank, with business and
retail diversity in its portfolio, was placed favourably to meet macroeconomic headwinds. However, to
grow earnings at 5 per cent was going to be tough. Luckily, Nedbank was in a good position to grow with
a “price to book ratio”; measuring the share price against the bank’s equity or net asset value at 2 times
was better than the 1.3 times it commanded in 2008. Nedbank equalled the market ratings of Standard
Bank and Barclays Africa, but FirstRand was still the clear leader.67 Dr. Reuel Khoza, Nedbank’s
chairman,68 emphasized that the company had a strong risk culture and followed world-class enterprisewide risk management, which aligned strategy, policies, people, processes, technology and business
intelligence in order to evaluate, manage and optimize opportunities, threats and uncertainties the group
might face in its ongoing efforts to maximize sustainable shareholder value.
Brown intended to announce the latest financial results. Nedbank’s headline earnings had increased by
21.4 per cent to R7,510 million, driven by good revenue growth and an improving credit loss ratio of 1.05
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per cent.69 Because of the benefits of risk-adjusted pricing and portfolio-tilt-driven changes in the asset
and deposit mix, the net interest income (NII) had increased 9.1 per cent as average interest-earning
banking assets grew 7.5 per cent and the net interest margin (NIM) widened to 3.53 per cent. Nedbank
planned to spend R1 billion over the next two to three years to expand its retail footprint.
Ingrid Johnson, Nedbank’s group managing executive for Retail and Commercial Banking, was named
the most effective banker in South Africa by her peers in 2013. Beginning in 2007, she had replaced the
“command and control” organizational design with a decentralized model that gave field managers much
greater responsibility and power.70 Furthermore, she ensured that staff at all levels embraced the changes
by conducting road shows and personally speaking to 2,300 staff members in the retail cluster. In 2012,
she held retail strategy conversations with 17,000 staff members all over Nedbank over a four-month
period.71
Brown wanted to emphasize that Nedbank’s multi-year focus on the importance of culture and values had
positioned the company well to continue to deliver to all its stakeholders and to adapt to a volatile and
challenging economic environment.72 He intended to provide more impetus for the transformation
strategy by updating the Dagwood with the aspiration of being “at the forefront of Leadership and
Transformation.”73
Nedbank had a holistic view of sustainability and remained adamant about achieving sustainability on
four fronts — economic, environmental, social and cultural. Khoza declared that Nedbank was striving to
be a leader in sustainability, not only for its own strategic positioning but, most importantly, because it
made sound business and moral sense.74
Brown thought about how much he loved Nedbank and how much there was still to do.75 Nonetheless, he
wanted to share with his audience that success for him meant success at home and work, a balanced life.
He hoped that they would find something useful for their own organizations in his presentation on the role
of vision, culture and measurement in turnaround strategies. He was determined that Nedbank would not
experience a repetition of the low points of 2003 and considered strategies to sustain its financial growth.
The question that he ultimately asked himself was, “How could we, as a collective, leverage the strong
platform off which we now operate to achieve all we had set out to achieve?”76
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EXHIBIT 1: NEDBANK’S 2012 FINANCIAL HIGHLIGHTS
Improvement across all key performance indicators
Year ended
Headline earnings (Rm)
Economic profit (Rm)
HEPS** (cents)
Diluted HEPS (cents)
Preprovisioning operating profit (Rm)
ROA (%)
ROE (excluding goodwill) (%)
ROE (%)
Tangible NAV per share (cents)
Common equity Tier1 capital ratio1 (%)
Dividend per share (cents)
NII to average interest-earning banking assets2 (%)
Credit loss ratio – banking advances (%)
Non-interest revenue/expenses ratio (%)
Efficiency ratio (%)
Assets under management (Rm)
Life assurance embedded value (Rm)
Life assurance value of new business (Rm)
% change
21.4
63.5
20.6
19.0
13.6
11.3
24.3
34.1
33.4
37.7
2012
7,510
1,511
1,646
1,595
15,580
1.13
16.4
14.8
10,065
11.4
752
3.53
1.05
84.4
55.5
150,495
2,030
563
2011
6,184
924
1,365
1,340
13,709
0.99
15.3
13.6
9,044
10.5
605
3.48
1.13
81.5
56.6
112,231
1,522
409
RM: Rand millions; HEPS: headline earnings per share; ROA: return on assets; ROE: return on equity; NII: net interest
income.
Source: www.nedbankgroup.co.za/financial/2012AnnualResults/pdf/Group_results _booklet.pdf, accessed November 14,
2013.
EXHIBIT 2: NEDBANK GROUP HISTORY
Source: Adapted from Jabu Maphalala, www.nedbankgroup.co.za/aboutHistory.asp, accessed November 14, 2013.
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EXHIBIT 3: NEDBANK’S DAGWOOD
Source: Nedbank company documents, accessed November 5, 2013.
EXHIBIT 4: NEDBANK’S 10 TRANSFORMATION TRUTHS
1. We are transforming because it’s the right thing to do, not because we’re told to do so.
Transformation is a business imperative to Nedbank.
2. Transformation affects every single area of our business and every person we interact with — from
staff members and internal stakeholders to clients, business partners, suppliers and shareholders, as
well as communities and the wider environment.
3. Transformation is needed in South African society and in business and it is the responsibility of every
person to make it happen.
4. Transformation requires an environment of trust and transparency and the opportunity for everyone to
be heard.
5. Transformation in Nedbank must be unifying, fair and transparent.
6. Although transformation has cost implications for Nedbank, this is seen as a short-term cost with
long‐term benefit.
7. Transformation targets will be embedded in our strategies and business plans and negotiated through
ongoing consultation.
8. We will pro‐actively grow and develop our internal skills and own talent pool.
9. We will focus on the support and empowerment of black people, with particular emphasis on Africans,
as well as women and all people with disabilities, in all areas and at all levels of the organization.
10. Transformation is non‐negotiable.
Source: www.nedbankgroup.co.za/pdfs/transformationBooklet/ transformationChapter05.pdf, accessed November 14, 2013.
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ENDNOTES
1
Mike Brown has been the CEO of Nedbank since 2011.
Nedbank Group Limited Reg No 1966/010630/06, 135 Rivonia Road, Sandown, Sandton, 2196, South Africa. The group’s
principal banking subsidiary is Nedbank Ltd. Old Mutual plc is the majority shareholder, owning 52 per cent of the group.
Nedbank’s ordinary shares have been listed on the Johannesburg Stock Exchange (JSE) since 1969;
www.nedbankgroup.co.za/aboutGrpprofile.asp, accessed August 4, 2013. Old Mutual plc is a public company limited by
shares, incorporated in England and Wales under registered number 3591559, www.oldmutual.com/about/index.jsp,
accessed August 4, 2013.
3
Gordon Institute of Business Science (GIBS), Reg No 99/19816/08, established in 2000, is the business school campus of
the University of Pretoria. GIBS is named in recognition of the contribution to business and significant endowment to GIBS
by Sir Donald Gordon, the founder and former chairman of Liberty Life. The GIBS MBA is accredited by the Association of
MBAs (AMBA), equipping students for success in both local and international arenas; www.gibs.co.za/about-us/who-arewe.aspx, accessed October 10, 2013; www.gibs.co.za/programmes/academic-programmes/mba.aspx, accessed October
10, 2013.
4
GIBS Forum, www.gibs.co.za/news-and-events/news-and-events_1/forum-events/gibs-forum.aspx, accessed October 10,
2013.
5
As of August 4, 2013, one South African rand (R1) = approximately US$0.1017 or CAD$0.1056;
www.xe.com/currencyconverter/, accessed August 4, 2013.
6
Annual Report 2012, www.nedbankgroup.co.za/financial/Nedbank_ar2012/downloads/NedbankIntegratedReport.pdf,
accessed August 8, 2013.
7
Presentation by Mike Brown, CEO of Nedbank, at GIBS Forum on July 10, 2013.
8
“Best South African Bank for 2012,” EuroMoney, www.fanews.co.za/article.asp?People_and_Companies~12,Awards~
1236, Nedbank_named_Best_Bank_in_South_Africa_by_Euromoney_International_Finance_Magazine~12169, accessed
August 4, 2013.
9
“The Only Carbon Neutral Bank in Africa,”
www.nedbankgroup.co.za/financial/2012AnnualResults/pdf/2012_nedbank_group_advert.pdf, accessed August 4, 2013.
10
BoE, formerly known as the Board of Executors, was established as a trust company in Cape Town in 1838.
www.nedbankgroup.co.za/abouthistory.asp,
www.nedbankgroup.co.za/financial/Nedbank_ar2012/operational/nedbank_wealth.asp, accessed August 4, 2013.
11
E. De Giorgio, “Stanbic Still Shuns Suitor Nedcor,” African Business, February 2000,
www.africasia.com/archive/ab/00_02/abfn0201.htm, accessed August 4, 2013.
12
In 2003, Nedbank had 24,205 employees. In 2004, Nedbank had 21,103 employees;
www.nedbankgroup.co.za/financials/ar2004/pdfs/3yearreview.pdf, accessed August 4, 2013.
13
“Sustainable Bank of the Year, Middle East and Africa,” Financial Times,
www.ifc.org/wps/wcm/connect/industry_ext_content/ifc_external_corporate_site/industries/financial+markets/news/winners+
of+the+2012+ft-ifc+sustainable+finance+awards+announced, accessed August 4, 2013.
14
See Exhibit 1, www.nedbankgroup.co.za/pdfs/beeDeal/BBBEECertificate2013.pdf; www.veridex.co.za/ratings.html,
accessed July 20, 2013.
15
www.nedbankgroup.co.za/aboutHistory.asp, accessed August 8, 2013.
16
V. Hawarden, M. Sutherland and M. Adonisi, “Stratafin Inc.: Auditing Change,” Ivey # 9B12C006, March 13, 2012, pp.1–
15.
17
Central Intelligence Agency (CIA), The World Factbook 1994: South Africa, 1994,
www.umsl.edu/services/govdocs/wofact94/wf950220.txt, accessed October 13, 2013.
18
Labour Relations Act, No. 66 of 1995,” Republic of South Africa, Pretoria, Government Printers, 1995.
19
“The Basic Conditions of Employment Act, No. 75 of 1997,” Republic of South Africa, Pretoria, Government Printers,
1997.
20
“Employment Equity Act, No. 55 of 1998,” Republic of South Africa, Pretoria, Government Printers, 1998.
21
“Broad-Based Black Economic Empowerment Act, No. 53 of 2003,” Republic of South Africa, Pretoria, Government
Printers, 2003.
22
Financial Sector Charter, www.westerncape.gov.za/Text/2004/5/the_finance_charter.pdf, accessed September 10, 2013.
23
South Africa Yearbook 2003/04, www.gcis.gov.za/content/resource-centre/sa-info/yearbook/2003-04, accessed
September 10, 2013.
24
Ibid.
25
See Exhibit 2, www.nedbankgroup.co.za/aboutHistory.asp, accessed November 14, 2013.
26
Dimension Data plc is an IT services and solutions provider that uses its technology expertise, global service delivery
capability and entrepreneurial spirit to accelerate the business ambitions of its clients. Dimension Data is a member of the
NTT Group; www.dimensiondata.com/en-ZA#.Uf4j4NIwdsk, accessed August 4, 2013.
27
Nedcor Annual Report 2003, www.nedbankgroup.co.za/financials/2001Interim/presentation/tsld016.htm;
www.nedbankgroup.co.za/financials/ar2003/index.htm, accessed September 10, 2013.
28
Ibid.
29
R. Moss Kanter, “Leadership and the Psychology of Turnarounds,” Harvard Business Review, June, 2003, pp. 59–67,
www.ecampus.nmit.ac.nz/moodle/file.php/4599/Diversity/HBR%20-%20Kanter,%20Leadership%20and%20the%20
Psychology%20of%20Turnarounds,%202003.pdf, accessed August 11, 2013.
2
Page 13
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30
Tom Boardman’s presentation at GIBS Forum in 2011, www.youtube.com/watch?v=RjdFXFAGZm0, accessed August 1,
2013.
31
“The Role of Strategy, Culture and Leadership in the Nedbank Turnaround — The Tom Boardman Story,” Values Centre,
2003, www.valuescentre.com/uploads/2011-01-05/The%20Nedbank%20Turnaround%20%20The%20Tom%20Boardman%20Story.pdf, accessed August 11, 2013.
32
B. Sergeant, “Tom’s First Day,” Moneyweb, www.moneyweb.co.za/moneyweb-historical-news-news/toms-firstday?sn=Daily%20news%20detail, December 9, 2003, accessed October 21, 2013.
33
“The Role of Strategy, Culture and Leadership in the Nedbank Turnaround.”
34
Ibid.
35
Mike Brown, presentation at GIBS Forum, July 10, 2013 referring to E. Wiener, “Nedcor Shareholders Still in the
Dark,” Moneyweb, May 13, 2004, www.moneyweb.co.za/moneyweb-historical-news-news/nedcor-shareholders-still-in-thedark?sn=Daily%20news%20detail, accessed October 21, 2013.
36
J. Collins, Good to Great. Why Some Companies Make the Leap and Others Don’t, HarperCollins, New York, 2001.
37
Basel III is a comprehensive set of reform measures, developed by the Basel Committee on Banking Supervision, to
strengthen the regulation, supervision and risk management of the banking sector; www.bis.org/bcbs/basel3.htm, accessed
October 21, 2013.
38
Interviews with Chantel van der Westhuizen, Head, Leadership & Management Development, Group HR People
Development, on February 1, 2013; March 26, 2013; May 23, 2013; June 10, 2013; July 31, 2013; August 2, 2013 and
November 5, 2013.
39
Interviews with Dean Retief, Executive, Learning and Development, Group HR People Development, March 26, 2013;
November 5, 2013.
40
“Community Fair Share 2030” project highlighted Nedbank’s vision of a successful South Africa by 2030.
41
“The Role of Strategy, Culture and Leadership in the Nedbank Turnaround.”
42
C. Thwaits and C. Bouwer, eds., in association with the Gordon Institute of Business Science, Behind the Green Veil,
Reflections on Sustainability, Media in Africa, Pretoria, 2013, p. 164.
43
www.nedbankgroup.co.za/financial/Nedbank_ar2012/downloads/NedbankIntegratedReport.pdf, accessed October 21,
2013.
44
Blondie Comics, www.blondie.com/, accessed August 4, 2013.
45
Nedbank’s “Dagwood,” www.valuescentre.com/uploads/2011-01-05/The%20Nedbank%20Turnaround%20%20The%20Tom%20Boardman%20Story.pdf, accessed August 4, 2013.
46
Closing share price of Nedbank on November 7, 2013 was R970 according to
www.sharenet.co.za/v3/quickshare.php?scode=NBKP, accessed November 9, 2013.
47
“Tom Boardman Significance of Values,” YouTube, December 3, 2010, www.youtube.com/watch?v=wWLdw58X1nc,
accessed August 4, 2013.
48
Mike Brown, presentation at GIBS Forum, July 10, 2013.
49
I-Net Bridge (Business), “Clients Can Buy into Nedbank,” Fin24 archives, August 15, 2005,
www.fin24.com/Economy/Clients-can-buy-into-Nedbank-20050815, accessed September 29, 2013.
50
R. Barrett, Liberating the Corporate Soul: Building a Visionary Organization, Butterworth-Heinemann, Boston, 1998; R.
Barrett, “The New Leadership Paradigm: An Interview with Richard Barrett,” YouTube, December 6, 2010,
www.youtube.com/watch?v=WX_DskhnxS4, accessed August 4, 2013.
51
Interview with Ayn Brown, Executive, Organizational Development, Group HR, on July 29, 2013.
52
53
P. Ndzamela, “Nedbank Group: A Green Approach,” Financial Mail, November 15, 2013, pp.28-32.
Nedbank, 2009 in Nedbank Group History, www.nedbankgroup.co.za/aboutHistory.asp, accessed September 29, 2013.
J. Erasmus, “Nedbank Achieves Carbon Neutrality,” Media Club South Africa, 2010,
www.mediaclubsouthafrica.com/index.php?option=com_content&view=article&id=1865:nedbank-carbon-neutral150710&catid=45:economynews&Itemid=114, accessed July 29, 2013.
55
“The Green Trust, Marine, Sustainable Agriculture, Climate Change: Things Don’t Happen on Their Own,”
www.wwf.org.za/what_we_do/sustainable_business/approach/partnerships/nedbank/, accessed September 19, 2013.
56
Thwaits and Bouwer, Behind the Green Veil, p. 164.
57
“Broad-Based Black Economic Empowerment, Act No. 53 of 2003.”
58
Ndzamela, pp.28–30.
59
“Nedbank, 2012: Introducing My Financial Life,” www.nedbank.co.za/website/content/products/product_detail_
new.asp?SubSubcatid=6946&Subcatid=709&ProductID=641, accessed September 10, 2013.
60
R. Steyn, “Nedbank Launches Live Point of Sale Solution — First in Africa, Middle East,” VentureBurn.com, 2013,
www.ventureburn.com/2013/02/nedbank-launches-live-point-of-sale-solution-first-in-africa-middle-east/, accessed
September 20, 2013.
61
Ndzamela, pp. 28–30.
62
Ecobank Transnational Incorporated (ETI) is a public limited liability company, established as a bank holding company in
1985 under a private sector initiative spearheaded by the Federation of West African Chambers of Commerce and Industry.
The Ecobank/Nedbank alliance is the largest banking network in Africa with more than 1,500 branches in 35 countries. As
part of its commitment to offering a uniquely One Bank experience, the alliance provides tailored banking and business
advisory solutions to Ecobank and Nedbank clients across Africa. www.ecobank.com/group/aboutus.aspx;
www.ecobanknedbankalliance.com/home.asp.
54
Page 14
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9B14C027
Ndzamela, pp. 28-30.
Lekgotla is a word in the Sesotho language meaning conference or discussion by the elders in the tribe gathered under a
tree. Nedbank adopted this word for its management conferences.
65
Nedbank Academy company documents.
66
Ndzamela, pp. 28–30.
67
M. Mittner, “Shift in Strategy, Slow and Steady Wins,” Financial Mail, November 15, 2013, pp. 31–32.
68
Dr. Reuel Khoza, chairman of Nedbank since 2006, as quoted by Tony Manning in “Reuel Khoza: Involving Business in
Politics,” www.tonymanning.com, April 20, 2012, which is also quoted in Nedbank Annual Report 2011.
69
Credit loss ratio, www.nedbankgroup.co.za/financial/2012AnnualResults/pdf/2012_nedbank_group_advert.pdf, accessed
November 5, 2013.
70
M. Tushman and D. Kiron, “Ingrid Johnson and Nedbank Business Banking,” Harvard Business School, January 16, 2013,
9-410-003, pp. 1–27.
71
“African Banker Star Profile: The Art of Leadership of Ingrid Johnson,” African Banker, 3rd Quarter, 2013.
72
Headline earnings, www.nedbankgroup.co.za/financial/2012AnnualResults/pdf/2012_nedbank_group_advert.pdf.
73
Nedbank company documents on new Dagwood.
74
Nedbank Annual Report, 2012, www.nedbankgroup.co.za/financial/2012AnnualResults/pdf/2012_nedbank_
group_advert.pdf, accessed November 5, 2013.
75
Ndzamela, pp. 28–30.
76
Nedbank Cultural Transformation Lekgotla company documents.
64