Liberty's Standard nexus
One thing that is not changing, for better or worse, is Liberty's relationship with Standard Bank, says Standard Bank group joint chief executive officer (CEO) Sim Tshabalala.
Tshabalala is very happy with the current level of holding in Liberty at a little over 50%. He is adamant that neither a buyout and delisting, nor an unbundling is being considered.
“Growing up, I remember that while Checkers was generic for plastic bag and Colgate for toothpaste, Liberty was generic for life insurance,” said Tshabalala.
“The bank's opinion as majority shareholder is that Liberty remains a fundamentally sound business. We remain confident that Liberty's solvency, dividend security, financial soundness and capacity for long-run profitability, competitiveness and sustainability are not compromised.”
It was widely speculated that the bank had imposed a 10-point plan on Liberty but Tshabalala says it is just “supporting and assisting” Liberty CEO Thabo Dloti to help the company recover as soon as possible. Both the short-term and long-term plans have the bank's full support. Officially, at least, no member of senior management will be expected to fall on his sword. Tshabalala is confident Liberty can both preserve its position in the affluent market and diversify its income stream in February 2017.
He says the Standard Bank group is a portfolio of businesses in which some businesses won't perform at times, but will make a stronger contribution at others. And it is true that life industry lapses are increasing while bank bad debts are stabilising or even improving.
Standard Bank plays a governance role at Liberty through its seats on the Liberty board. As well as Tshabalala, Dave Munro, head of the corporate and investment bank, was also appointed to the board in February 2017.
Munro has the job which former Liberty CEO Myles Ruck once held. Perhaps he will play the same attack-dog role for the bank.
Liberty chairman Jacko Maree is not, strictly speaking, a representative of the bank, even though he was Standard Bank's CEO for more than a decade. But he can't be called independent, especially since he was appointed deputy chairman of Standard Bank last year.
But just as important for the bank is its working relationship with Liberty. Both Dloti and Tshabalala say the bancassurance agreement is the best in the country — Dloti says the tie-up between Old Mutual and Nedbank, when he was there, was much looser and less clearly defined.
At its base, bancassurance is embedded credit life products sold in the branch to go primarily with home loans and vehicle finance. But these products are much more profitable for the bank, as Liberty receives just 10% of the profit.
In 2016 Liberty's credit life profit increased by about 10% to R160m. More significant is the R406m Stanlib received in service fees on assets sourced through Standard Bank distribution. Stanlib has developed a series of multimanager unit trusts for Standard Bank financial planners, cutely named Goal Standard.
Tshabalala says the relationship with Liberty makes even more sense now that the bank is developing its wealth management business more aggressively; insurance and investments are a key part of the offering.
On the whole there has been clear demarcation of responsibility. Some posters advertising Standard Insurance caused confusion, but Tshabalala promises that this will dovetail with Liberty's short-term insurance plans, not compete with them.
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Tshabalala is very happy with the current level of holding in Liberty at a little over 50%. He is adamant that neither a buyout and delisting, nor an unbundling is being considered.
“Growing up, I remember that while Checkers was generic for plastic bag and Colgate for toothpaste, Liberty was generic for life insurance,” said Tshabalala.
“The bank's opinion as majority shareholder is that Liberty remains a fundamentally sound business. We remain confident that Liberty's solvency, dividend security, financial soundness and capacity for long-run profitability, competitiveness and sustainability are not compromised.”
It was widely speculated that the bank had imposed a 10-point plan on Liberty but Tshabalala says it is just “supporting and assisting” Liberty CEO Thabo Dloti to help the company recover as soon as possible. Both the short-term and long-term plans have the bank's full support. Officially, at least, no member of senior management will be expected to fall on his sword. Tshabalala is confident Liberty can both preserve its position in the affluent market and diversify its income stream in February 2017.
He says the Standard Bank group is a portfolio of businesses in which some businesses won't perform at times, but will make a stronger contribution at others. And it is true that life industry lapses are increasing while bank bad debts are stabilising or even improving.
Standard Bank plays a governance role at Liberty through its seats on the Liberty board. As well as Tshabalala, Dave Munro, head of the corporate and investment bank, was also appointed to the board in February 2017.
Munro has the job which former Liberty CEO Myles Ruck once held. Perhaps he will play the same attack-dog role for the bank.
Liberty chairman Jacko Maree is not, strictly speaking, a representative of the bank, even though he was Standard Bank's CEO for more than a decade. But he can't be called independent, especially since he was appointed deputy chairman of Standard Bank last year.
But just as important for the bank is its working relationship with Liberty. Both Dloti and Tshabalala say the bancassurance agreement is the best in the country — Dloti says the tie-up between Old Mutual and Nedbank, when he was there, was much looser and less clearly defined.
At its base, bancassurance is embedded credit life products sold in the branch to go primarily with home loans and vehicle finance. But these products are much more profitable for the bank, as Liberty receives just 10% of the profit.
In 2016 Liberty's credit life profit increased by about 10% to R160m. More significant is the R406m Stanlib received in service fees on assets sourced through Standard Bank distribution. Stanlib has developed a series of multimanager unit trusts for Standard Bank financial planners, cutely named Goal Standard.
Tshabalala says the relationship with Liberty makes even more sense now that the bank is developing its wealth management business more aggressively; insurance and investments are a key part of the offering.
On the whole there has been clear demarcation of responsibility. Some posters advertising Standard Insurance caused confusion, but Tshabalala promises that this will dovetail with Liberty's short-term insurance plans, not compete with them.
FINANCIAL MAIL
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