Johannesburg - Chinese banking group ICBC, a 20% shareholder in
Standard Bank Group [JSE:SBK], did not place pressure on the bank to slash its workforce in an attempt to deliver better shareholder returns.
That's according to group chief executive
Jacko Maree, who addressed the media on Friday in response to mounting criticism around job losses at the bank.
"I don't know where that rumour started, but it seems to be getting some traction," said Maree in response to a Fin24. question.
On Friday, Standard said it will cut 1 305 permanent jobs and 710 contractors in Johannesburg and London to reduce costs as it faces declining revenue.
Maree added: "Of course you are going to have shareholders who say that 13% return on equity is not good enough, but you need to remember that more than 40% of Standard Bank is held by a variety of international shareholders and it's not just ICBC."
Deputy CEO
Sim Tshabalala pointed out that ICBC had two active board members on the Standard Bank board. They had not put pressure on the bank, but he said:"We have received questions from them."
Asked whether Standard Bank believed that the ICBC deal, concluded in 2007, had been a worthwhile exercise which had benefited Standard Bank stakeholders, Tshabalala said: "We are disappointed with the revenue, but the capital adequacy of the bank and liquidity is high as a result of the transaction."
While Standard Bank has been facing declining profits, ICBC has enjoyed a bumper third quarter.
ICBC, the world's largest lender by market value, said on Thursday that its profits rose 27% in the third quarter to $6.4bn. The Chinese group has been the world's most profitable banking group for the last two years.
Asked whether Standard Bank could justify the job cuts when the bank was on track to deliver more than R10bn in operating profits, Maree said a bank could not simply be judged on the back of its profits. Stakeholders needed to look at the return on equity (ROE) as the most correct way of assessing these profits and the retrenchment decision.
Standard Bank has seen its ROE drop from 25.4% in 2005 and 2006 to a low of 13.5% in the first half of 2010. This was blamed on a weak operating environment as well as increased competition within the domestic sector.
Tshabalala pointed to competitors Capitec and African Bank Investments Limited (Abil), which had been aggressive in the lower-income markets. He said international competitors are "back with a vengeance" in the business and investment banking sectors.
In Friday late afternoon trade, Standard Bank shares were off 31c (0.3%) to trade at R102.92.
- Fin24
* The writer holds ordinary and preference shares in Standard Bank, Abil and Capitec.