4.4 The Standard Bank Group
4.4.2 Standard Bank Group strategy
The Standard Bank Group’s strategy is to build a leading Africa-focused financial services organisation using all its competitive advantages to the full. The group focusses on delivering superior sustainable shareholder value by serving the needs of its customers in chosen countries in Africa. It also connects other selected emerging markets to Africa and to each other, applying its sector expertise, particularly in natural resources, globally. The group’s key differentiator is said to be its people. Standard Bank Group has three main pillars of business: Personal & Business Banking, Corporate & Investment Banking, and Wealth.
Standard Bank Group is listed on the Johannesburg Stock Exchange (JSE) Limited and is governed by the following: The South African Companies Act, the JSE, King Code (now King IV™) and the Banks Act.
The headline earnings for the year were R26 billion and total assets were R2 trillion as at December 2017 and the group employed 48 322 permanent employees across all geographies. Standard Bank Group has 1 212 branches and 9 036 ATMs on the African continent (Standard Bank Group, 2017a).
Standard Bank Group strategy is made up of a series of building blocks designed to ensure that the bank’s employees all understand the strategy and say the same thing about the strategy. The elements of the strategy are: purpose, legitimacy, vision, values and principles, which are delivered by the bank’s business units and underpinned by the bank’s values. The bank’s values serve as beacons to guide employees’ behaviour, actions and decisions (Standard Bank Group, 2016a). The Standard Bank Group’s strategy is designed to realise the opportunities that Africa presents (Standard Bank Group, 2017a). Standard Bank Group’s strategy building blocks are: purpose, values, key focus areas; client services teams and strategic value drivers. Figure 4.9 shows the Standard Bank Group strategy.
170 Figure 4. 9: Standard Bank Group Strategy Source: Standard Bank Group (2017a:12).
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Figure 4.9 depicts Standard Bank Group strategy. This is underpinned by the bank’s purpose; vision; eight (8) values and three (3) key focus areas. The values are:
• Being proactive;
• Growing its people;
• Constantly raising the bar;
• Working in teams;
• Delivering to its customers
• Respecting each other
• Serving its clients; and
• Uploading the highest levels of integrity.
The key focus areas are:
• Client centricity;
• Digitisation; and
• Universal financial services organisation.
The Standard Bank Group strategic value drivers are client focus plus employee engagement plus risk conduct resulting in financial outcome and social, economic and environmental (SEE) outcomes.
The centre wheel shows the client service teams, namely: Personal and Business Banking (PBB); Corporate and Investment Banking (CIB); Wealth and Liberty. The three regions in which Standard Bank Group is represented are: South Africa; Africa Regions and International.
4.4.2.1 Standard Bank’s six capitals
In Chapter 3 the IIRC’s International <IR> Framework’s value-creation model is discussed, with the researcher indicating that King IV™ is largely anchored on the International <IR> Framework. King IV™ justifies using the Framework by stating that:
There is now general acceptance that the employment, transformation and provision of financial capital represents only a fraction of an organisation’s activities. Instead, inclusive capitalism takes account of the employment, transformation and provision of all sources of capital – the six capitals – in order
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to reposition capitalism as the engine of shared prosperity. It gives parity to the sources of value creation. (King IV™ Report on Corporate Governance for South Africa, 2016:4)
The Standard Bank Group has adopted a value-creation model that is not dissimilar to the IIRC’s model. According to the Standard Bank Group Annual Integrated Report 2017, value is defined as the “outcomes we aim for – what success looks like – in each of our strategic value drivers” (Standard Bank Group, 2017a:4).
The Standard Bank Group has adopted the six capitals model discussed extensively in chapter 3. According to the Standard Bank Group Annual Integrated Report 2017, the “six capitals are implicit in the value drivers that underpin our strategy, and in our material issues” (Standard Bank Group, 2017a:4).
4.4.2.2 Standard Bank Group’s operating presence
In 2015 the Standard Bank Group sold a majority stake in Standard Bank PLC (SB PLC) to its already 20% shareholder, ICBC, and other interests outside Africa. The Group is now mainly focused on Africa and operates in 20 African countries. The 20 countries that form the population for this research study are discussed in Chapter 5.
4.4.2.3 Key client concerns
Standard Bank Group (2017a:19) in its annual integrated report for 2017 states the following as key client concerns:
• Improving the client’s banking experience;
• Combating cybercrime and fraud;
• Cheaper and more convenient banking experience;
• Ensuring the safety of their money; and
• Assistance in times of financial distress.
4.4.2.4 Managing associated risks
According to the IIRC’s International <IR> Framework (International Integrated Reporting Council, 2013:27), under the topic risks and opportunities, “An integrated report should answer the question: What are the specific risks and opportunities that affect an organization’s ability to create value over the short, medium and long term, and how is the organization dealing with them?” The Standard Bank Group Annual
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Integrated Report 2017 states that it aims to “instil conscious risk-taking across the group. We take a holistic and forward-looking view of the risks we face by continually assessing current and emerging risks. Our risk appetite is regularly reviewed, in response to changes in our operating context and our exposures are managed accordingly” (Standard Bank Group, 2017a:16).
4.4.2.5 Material issues
In Chapter 3 (section 3.5.14) the IIRC’s International <IR> Framework is discussed comprehensively. The IIRC states that, “An integrated report should disclose information about matters that substantially affect the organization’s ability to create value over the short, medium and long-term” (International Integrated Reporting Council, 2013:18). King IV™ has adopted the same material issues definition as given in the International <IR> Framework (King IV™ Report on Corporate Governance for South Africa, 2016:14).
The Standard Bank Group (2017a:19) has adopted the International <IR> framework in its integrated reporting. Under the materiality section related to key client concerns, it states that:
• Understanding the needs of its clients is important;
• Providing its customers with a personalised and comprehensive financial services offering is imperative;
• Empowering its people to better provide an excellent and consistent client experience;
• Making it easier, faster and safe to transact by accelerating innovation and digitisation; and
• Partnering with its clients during challenging times
It is important to mention that Standard Bank Group in its Annual Integrated Report 2017 has stated various strategies to address its clients’ concerns and its material issues.
4.4.2.6 Responding to stakeholders
The IIRC framework and King IV™ have unequivocally adopted the stakeholder- inclusive approach. This will be discussed further in this chapter. The Standard Bank Group (2017a:11) has identified the following as its material stakeholders: clients;
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employees; employee representatives; regulators; suppliers; governments;
shareholders; investment analysts; communities, and civil society.
4.5 Conceptualising a Corporate Governance and Business Ethics Framework