Johannesburg - Financial services group FirstRand has not lost its entrepreneurial culture, despite a change of guard in leadership.

That's according to CEO Sizwe Nxasana, following the release of the group's interim results for the period to end-December 2009.

"We have definitely retained our entrepreneurial culture," said Nxasana, explaining that senior managers are given a great deal of freedom to pursue local and international business opportunities.

Taking banking unit First National Bank as an example, the group has been early adopters of various technology-driven solutions to win customers. In Zambia and Nigeria, for instance, mobile banking has spearheaded the launch of FNB's operations in those countries.

The bank is also negotiating to bring the international payment gateway system PayPal to South Africa - a move being tipped by industry experts as a key differentiator for FNB in the race to win customers in the small business sector.

Nxasana recently stepped into the CEO role previously occupied by Paul Harris. Analysts say he has big shoes to fill in replacing FirstRand's founding members - Harris, GT Ferreira and Laurie Dippenaar.

Much has been made of the entrepreneurial culture instilled by the founders, but recent problems encountered by the group, including some over-exuberant wheeling and dealing at investment banking subsidiary Rand Merchant Bank (RMB), have left investors questioning whether its management had been given too much freedom.

Still, FirstRand continues to pursue an equity-ownership strategy for its executives. In December, Nxasana and a number of other top brass laid out R366m to purchase shares from the founders.

This was done with the intention of aligning the long-term aims of all stakeholders and hopefully ensuring a higher return on investment.

Galileo Capital director Warren Ingram said high ownership levels among senior executives are well suited for a business like FirstRand.

"I think it is a competitive advantage; they are more likely to make the right long-term decisions and less likely to manage the business to meet short-term results," Ingram said

In a snap note to clients, BoE Private Clients pointed out on Tuesday that FirstRand had achieved the highest level of return-on-equity (17%) among the big four banking groups. Absa returned 15.5%, Standard Bank 13.6% and Nedbank 11.5% during their respective recent reporting periods.

BoE, however, retained a "hold" recommendation on the share at its current levels.

Shares in FirstRand were down 0.9% (17c) to 1 938c while the JSE financial services index was off 0.5%.

- Fin24.com