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At Liberty … and taking liberties

Standard Bank’s PR machine is going to be kept busy spinning the merits of bancassurance, while Huge Group gets a rap on the knuckles, and Naspers – well, more executive remuneration ‘good news for some’ there.
Liberty was young, modern and aggressive in a market dominated by tired old players, but times have changed. Image: Moneyweb

Thank goodness – soon we won’t have to watch Liberty floundering around, feebly trying to recover the top slot it held when it dominated in the South African life insurance industry. And for that matter the top position in the asset management business also.

Since 2003, when former CEO Roy Andersen quit, Standard Bank has called the shots at this once formidable insurance group. It has made all the CEO appointments, and has approved ridiculously high levels of remuneration for each one – presumably in the increasingly desperate hope they would succeed in reclaiming the group’s former glory.

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The writing probably appeared on the wall back in the late nineties when founder Donald Gordon exited South Africa to focus his efforts and wealth on the UK property market.

Gordon had created a great company very quickly.

Liberty was the young, modern and aggressive newcomer to a market dominated by tired old players Sanlam and Old Mutual.

It was crucial that he had been able to build up and motivate the best sales team in the country; after all, life insurance is a product that is sold not bought.

Lost sheen …

The speed at which the ‘young, modern and aggressive’ sheen wore off after Gordon’s departure does raise questions about how much substance there ever was to it. Perhaps things would have worked out differently if he had stayed on. Mind you, Gordon’s UK investments turned out to be a major disappointment.

It was indicative of Gordon’s status at the time that he was able to persuade Standard Bank to purchase the stake in Liberty back in the nineties in order to get control back from Guardian Royal Exchange.

Neither party was enamoured with the deal. But Gordon needed it, and back then it was very difficult to refuse him.

The latest offer

Standard Bank’s offer price – equivalent to about R89.96 a share – for the 46% of Liberty it doesn’t already hold is an attractive enough premium on recent trading levels but also happens to be around the level at which the share was trading 10 years ago.

So it’s not that compelling an offer – but the major minority shareholders have indicated they will accept.

The fact is, Liberty has become the market’s fuddy-duddy and needs a major overhaul.

So now we’re going to have to listen to endless PR drivel about the great synergistic benefits of bancassurance.

The Mozambican matter

On the subject of Standard Bank, news that it has appointed an acting CEO to replace the outgoing CEO of its Mozambique operation will not have gone unnoticed by the South African competition authorities.

It seems the former CEO, together with the director of corporate and investment banking at the Mozambique operation, were fined for fraudulent activities relating to the manipulation of foreign exchange rates.

Standard Bank was also fined and suspended from currency exchange activities for a year, while the Bank of Mozambique has debarred the two executives from management functions in the financial sector for six years.

Read: Standard Bank appoints acting CEO in Mozambique, after R66.18m fine

In the scheme of things the size of the fine is insignificant. But some may recall that this is not the first time Standard Bank’s name has been linked to questionable foreign exchange activity. It was one of 17 banks the SA Competition Commission announced, amid much fanfare back in 2015, that it was seeking to fine for alleged collusion in the manipulation of the rand-dollar currency trade. That extremely complex case seems to be making almost no progress.

‘Huge’ oops …

What is going on at Huge? It has been warned yet again about inappropriate video material relating to its offer for Adapt IT. According to a Sens announcement the audio-visual material was posted on “certain personal social media platforms of employees of Huge”.

Although it wasn’t available on any of Huge’s websites, the Takeover Regulation Panel (TRP) has told Huge that the video constitutes an “announcement” by Huge and that approval for such an announcement should have first been secured from the TRP.

“Accordingly, Huge has requested its employees to remove the video from their personal social media platforms and (it) retracts the statements contained in the video,” reads the Sens statement.

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Back in April Huge was told, also by the TRP, to remove two videos published on its website aimed at convincing Adapt IT shareholders to accept its offer.

Last week Huge also announced Nedbank was terminating its role as sponsor – effective August 15 – “by mutual consent”.

Naspers

A truly miserable week ended on a high note for a few Naspers executives. Late on Friday the company announced some of the details of its executive remuneration packages.

Of particular interest is the R84.5 million of Naspers shares that were awarded to CEO Bob van Dijk at zero cost.

Finance director Basil Sgourdos was awarded R50 million worth of shares at the same zero cost.

These are part of the ‘performance share units’ that significantly beef up the executives’ remuneration packages and the remuneration committee is very keen that we all know the vesting of these units is subject to the achievement of performance conditions.

So not a bad week for some.

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”One of the minor pleasures in life is to be slightly ill”
(Sir) Harold Nicolson (1886-1968)

I have always wondered which one of the two ”also-rans” – Liberty or Momentum, would depart from its current forms/status first!

It made sense for Standard bank to buy out Liberty.

The share price was at a 30 year low, that pretty much says everything.

End of comments.

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