Standard Bank Group Limited · JSE:SBK
Standard Bank — Investor Presentation (2001)
123 slides from Standard Bank's investor presentation, 2001
Slide 1: International Operations
STANDARD BANK INTERNATIONAL OPERATIONS Standard Bank International Operations
Slide 2: Presentation structure
Presentation structure uIntroduction -Martin Botha (Director-Resource Banking & Trade Finance) uNatural Resources -Martin Botha uDebt Capital Markets -Jonathan Pearson (Director-Capital Markets & Treasury) uTreasury -Jonathan Pearson uPrivate Client Banking -Rob Leith (Director-Private Banking) uRis
Slide 3: Abridged group structure
Abridged group structure Standard Bank Investment Corporation Limited (Stanbic) Standard Bank Standard International Offshore Group Holdings (Lux) Standard Bank Standard Bank Standard Standard Bank Standard London Jersey Isle of Man New York London (Asia) [224] [100] [78] [542] [42] International Op
Slide 4: Basis of strategy
Basis of strategy u SBIC - an African based regional banking group - resource rich and trade dependent u Consolidation and global banking leaves opportunity in certain markets u International operation’s lean capital base s Multiple margins s Use size as a virtue u Requirements to develop stand alon
Slide 5: Three themes
Three themes Resource Banking DEVELOPING ECONOMIES Debt Capital Markets NATURAL RESOURCES Trade and Commodity Finance Forfaiting Corporate Banking Project Finance Africa Corporate Finance Mining Corporate Finance Asset Management Treasury FUNDING Private Client Banking International Operations
Slide 6: What we do
What we do u Provide advisory, project and trade financing, hedging and trading services to the mining, metals and energy related sectors u Source and structure capital market and trade transactions primarily out of developing economies for distribution into major capital markets u Private client ba
Slide 7: Revenue split
Revenue split u Natural resources 28% u Developing economies 42% u Private client banking 20% u Other 10% International Operations
Slide 8: Where we do it
Where we do it Standard Bank London London 452 International Operations
Slide 9: Where we do it: Primary operating centres
Where we do it Primary operating centres London New York 452 Hong Kong 53 42 Miami 25 Singapore 19 International Operations
Slide 10: Where we do it: Private Banking: Islands
Where we do it Private Banking: Islands Isle of Man 100London 452 Jersey 224 International Operations
Slide 11: Where we do it: Representative offices
Where we do it Representative offices Stockholm 2 Isle of Man London Moscow 100 452 Prague 11 Shanghai Jersey 8 Tehran 2 224 Milan Istanbul Bogota 7 3 2 Dubai 4 5 Lima 5 Sao Paulo Sydney 11 2 Buenos Aires 8 International Operations
Slide 12: Martin Botha
Martin Botha International Operations
Slide 13: Coverage
Coverage Junior Producers Merchant Smelters Consumers Fund Developers Traders Fabricators Managers Refiners Precious Metals Venture Structuring Capital Base Metals Advisory Project Finance Trading Oil & Gas & Corporate Finance Electricity Trade Finance International Operations
Slide 14: Precious metals trading
Precious metals trading u Chairman Platinum and Palladium fix; LBMA member u Profitable 24hr trading capability via Hong Kong, London, Johannesburg and New York é Spot, forward and options é Bespoke hedging structures u Major physical gold distribution é Middle East é Singapore International Operati
Slide 15: Base metals trading
Base metals trading u Global trading business centred in London (LME) é Hong Kong, New York, Lima, Shanghai and Johannesburg u Geographically diversified customer base é Producers é Consumers é Traders é Brandeis acquisition doubles client base u Extensive product range é Spot, forward, averages, op
Slide 16: Advisory - Warrior brand
Advisory - Warrior brand Corporate and Project Finance services to: é Mining industry é Metals processing industries é Industrial minerals sector Activities Include: é Mergers and acquisitions advice é Project financing advisory services é Asset sales / acquisitions Global client base serviced from
Slide 17: Recent advisory mandates
Recent advisory mandates u Rio Tinto Sale of Neves Copper Mine in Portugal u Alcoa Sale of US ceramic proppants business u Avgold Financing of Target project in South Africa u Sud Chemic Sale of Albion Kaolin, Georgia, USA u Antofagasta Acquisition valuations on related party assets International Op
Slide 18: Mining finance
Mining finance u Project Finance for development of mining projects worldwide: é Rigorous financial and technical analysis é Adequate price and political risk mitigation é Confidence in ability to sell down to prudent hold level u Services Include: é Underwriting é Arranging é Technical evaluation é
Slide 19: Mine finance - Randgold example
Mine finance - Randgold example u London listed exploration and mining company - market cap. of c.US$80 million u Development gold project, Morila, both in Mali, Africa u Morila is owned 80% by Randgold and 20% by the Government of Mali u US$100 million funding requirement for the “greenfield” devel
Slide 20: Risks and mitigants - Randgold example
Risks and mitigants - Randgold example Risks Mitigants u Sponsor u Cost overrun facility established u Technical u Independent consultant (SRK) review of mine technical viability, management capabilities and operating costs. Randgold u Management had existing Mali experience u Operating u Cashflow m
Slide 21: Financing package - Randgold example
Financing package - Randgold example u US$90 million project loan facility é Tranche A - US$85 million é Tranche B - US$5 million (cost overrun) u 700,000 ounce gold hedging program u Term - five years u Arranged by Standard Bank and NM Rothschild u Syndicated to Société Générale, HypoVereinsbank, M
Slide 22: Present position - Randgold example
Present position - Randgold example u Standard Bank hold is US$15 million u Standard Bank undertook large percentage of the gold hedging u Highly remunerative transaction u Future opportunities: é Local banking é Physical gold offtake é Future financings for Randgold é Additional gold and energy hed
Slide 23: Update - Randgold example
Update - Randgold example u July 2000 AngloGold purchased 40% of the Morila mine for US$132 million u Mine construction completed in October 2000 u Last quarter the mine produced 160,000 ounces at a cash cost of US$90/ounce u Randgold market cap increased to US$200 million International Operations
Slide 24: Mine life cycle - SBL products
Mine life cycle - SBL products Ore Bankable Project sold Mine Mine body feasibility exploration or financing construction operating study arranged Venture Capital Warrior Advisory Project Finance Structured Products Trading Trade Finance International Operations
Slide 25: Integrated delivery - competitive advantage
Integrated delivery - competitive advantage u Resource Banking is an integrated banking business: Mining project finance access to producers å loan sub participated bank syndications å access to hedging business the second margin å flow business increased trading revenues å distribution of physical
Slide 26: Physical bullion
Physical bullion u Dominant Middle East supplier é 115 tonnes Dubai é 24 tonnes Turkey u Singapore target 60 - 80 tonnes pa u Refinery contracts u Russian, Australian, South African gold u Central Bank deposits u Metal trading facility balances International Operations
Slide 27: Metal trading facility (MTF)
Metal trading facility (MTF) u London Centralised Bullion trading balances system u Actively utilised by physical bullion clients London u Debit / credit client’s bullion account and credit / debit opposite currency counter-value u Interest paid / charged on US $ and bullion balances International O
Slide 28: MTF - client example
MTF - client example u Jewellery manufacturer requests 1000 oz physical gold é MTF bullion account debited 1000 oz and SBL delivers physical u 105% US Dollar collateral deposited at SBL and credited to MTF $ account ($273,000 @ $260 per oz) u Client fabricates / stocks jewellery International Operat
Slide 29: MTF - client example
MTF - client example u Client sells 1000 oz jewellery at price based on gold at spot $250 per oz u Client trades over MTF account to buy 1000 oz gold @ $250 u Bullion balance zero US $ balance +$23,000 International Operations
Slide 30: Revenues - physical
Revenues - physical u Premium charged on physical gold u Gold debit balance charged at gold lease rate and margin u Currency account interest paid at libid less margin u Collateral provides deposit u Trading orders and execution International Operations
Slide 31: Precious metals volumes
Precious metals volumes Physical Volumes (Oz Million per annum) 8 Physical Volumes 7 (Oz Million per annum) 6 5 4 3 2 1 0 1996 1997 1998 1999 2000 International Operations
Slide 32: Energy
Energy u Product Capability: â Structure, Price and Execute, options, swaps and tailor made structures on: é Electricity é Crude Oils é Refined Products é Jet Fuel é Fuel Oil é Diesel Fuel / Gasoil / Heating Oil é Natural Gas Indexation u Client Categories: é Oil and Gas Producers and Refiners é Tra
Slide 33: Energy group
Energy group u Established but still ‘under construction’ u Leverage off SB International geographic presence in Africa, Middle East and Russia /CIS u Product niche enhancement é Energy trade finance é Mining project energy input protection International Operations
Slide 34: Trade finance - focus
Trade finance - focus u Focus on commodities within our primary expertise é Metals é Oil and gas é African related (Stanbic representation) u Strong emphasis on second margin linkages with other areas of the Bank é African Banking Group - local forex é Base metals and energy groups - hedging é Forfa
Slide 35: Trade finance: deal details
Trade finance: deal details u CLIENT Glencore (offtaker and risk participant) u COUNTRY RISK Russia – Siberian Oil Company (“Sibneft”) u TRANSACTION DETAILS § TYPE Syndicated pre-export finance § AMOUNT $180m (SBLL underwrote $20m and sold down to $6.7m during syndication) § GOODS Crude Oil § TENOR
Slide 36: Trade finance: deal details
Trade finance: deal details u CLIENT Tema Oil Refinery u COUNTRY RISK Ghana u TRANSACTION DETAILS § TYPE Syndicated pre-export finance / import finance § AMOUNT $66m (SBLL underwrote $20m) § GOODS Crude oil in, products out § TENOR 12 months § PRICING L + 1.5% + 1.25% fee § COMMENTS SBL’s underwite
Slide 37: Trade finance: deal details
Trade finance: deal details u CLIENT Termoelectrica u COUNTRY RISK Romania u TRANSACTION DETAILS § TYPE Syndicated import financing § AMOUNT $85m (SBLL, Deutsche and ABN jointly underwrote) § GOODS Gas § TENOR 12 months § PRICING L + 3.5% + 2% fee § COMMENTS Ministry of Finance guaranteed Internatio
Slide 38: Trade finance: deal details
Trade finance: deal details u CLIENT Pan American Silver u COUNTRY RISK Peru u TRANSACTION DETAILS § TYPE Pre-production financing and mine start-up costs § AMOUNT $12m § GOODS Zinc, Lead and Copper concentrates § TENOR 24 months § PRICING L + 3.25% + 1135k fee § COMMENTS Voted “Deal of the Year” by
Slide 39: Customer Base
Customer Base PRODUCERS REFINERS/ CONSUMERS FINANCIAL SMELTERS Avmin Codelco Pasar Honda SA Reserve Bank Alcoa NIOC LG Metals Toyota Bank of England BHP Sonagol Rand Refinery Sumitomo National Bank of Roma KGHM Pan African Energy MKS Pechiney Bank Markazi Penoles Tema Oil Refinery Malaysia Smelting
Slide 40: Conclusion
Conclusion u Natural for SA Bank u South Africa Commodity based economies Africa Emerging Markets Mining growth u Integration More than one margin u Links with other business areas u Non core for our competition International Operations
Slide 41: Jonathan Pearson
Jonathan Pearson International Operations
Slide 42: Capital markets
Capital markets u Focus on debt securities u Divided between s Client servicing (51% of revenue in 2000) s Proprietary trading (49% of revenue in 2000) u Main trading operations s London s New York s Singapore u Further origination and sales representation s Hong Kong, Miami, Sao Paulo, Buenos Aires
Slide 43: Client servicing
Client servicing u Origination u Sales u Market making u Client financing u Research International Operations
Slide 44: Client servicing cont.
Client servicing cont. Profitable quarters 100% Profitable months 100% Profitable weeks 100% Profitable days 86% Mean £114k Revenues (£m) 2000 1999 28.6 18.4 International Operations
Slide 45: Client servicing - origination
Client servicing - origination u Focus on emerging market issues/borrowers u Sales driven - no league table deals u Target to sell down to zero u No differentiation between loans, bonds or structured products - client choice u US$1.9bn originated for 40 issuers in 2000 International Operations
Slide 46: Client servicing - sales and market making
Client servicing - sales and market making Products u Brady bonds and Sovereign Globals u Bank and Corporate E.M. Eurobonds u OECD floating and fixed rate Eurobonds u US$9.4bn turnover in 2000 International Operations
Slide 47: Client servicing - sales and market making
Client servicing - sales and market making Clients u Private banks u Commercial banks u Insurance companies u Hedge funds u Other financial institutions International Operations
Slide 48: Client servicing - client financing
Client servicing - client financing u Financing of marketable debt securities u Major business - portfolio size US$1.4bn at 31 December 2000 u Capital efficient u Over-collateralised - average 80% u Tight margin calls - average 6% price movement International Operations
Slide 49: Client servicing - client financing cont.
Client servicing - client financing cont. u Bonds only financed if known to or traded by bank u Tight risk management controls u Strong documentation u Bonds legally owned by bank - valuable source of liquidity through repo market u No losses in recent Turkish and Argentinian crises International Op
Slide 50: Proprietary trading
Proprietary trading u Focus on sovereign emerging market issuers u Actively distributed between: s Asia l (China, Hong Kong, Indonesia, Malaysia, Philippines) s Central and Eastern Europe l (Bulgaria, Poland, Russia, Turkey, Ukraine) s Latin America l (Argentina, Brazil, Colombia, Mexico, Venezuela)
Slide 51: Proprietary trading
Proprietary trading Profitable quarters 100% Profitable months 84% Profitable weeks 65% Profitable days 61% Mean £107k Revenues (£m) 2000 1999 26.9 27.4 International Operations
Slide 52: Proprietary trading: Decision factors
Proprietary trading Decision factors u Fundamental s Relative value s Political s Economic s Global macro picture International Operations
Slide 53: Proprietary trading: Decision factors
Proprietary trading Decision factors u Technical s Liquidity status of specific instruments and overall market s Activity of local market players s Constituency of foreign debt holders s Understanding “non economic” reasons for trading behaviour s Status of repo market s Volatility levels Internatio
Slide 54: Market volumes in 2000
Market volumes in 2000 US$bn Argentina FRBs 93.6 Brazil Cs 229.0 Colombia Globals 24.5 Mexico Pars 38.2 Russia Prins/30s 122.7 Turkey 10s and 30s 19.2 Venezuela DCBs 30.3 International Operations
Slide 55: Jonathan Pearson
Jonathan Pearson International Operations
Slide 56: Functions of the Treasury Division
Functions of the Treasury Division u Funding the SIH group u Responsibility for maintaining actual and regulatory liquidity u Foreign exchange client servicing and trading u Interest rate risk trading - cash and derivatives u Local markets trading u Repo trading / collateral management International
Slide 57: Treasury division
Treasury division u SIH balance sheet size at 31 December 2000 £3.66bn u Treasury division represents £0.66bn u Historic policy requires maintenance of high liquidity (typically CDs) at the expense of ROE u Main trading operation in London, New York and Hong Kong International Operations
Slide 58: Interbank loans and CDs
Interbank loans and CDs Interbank Loans & CDs 1,800 1,600 B+ to B- 1,400 BB+ to BB- 1,200 $ millions 1,000 BBB+ to BBB- 800 A- 600 AA to A 400 AAAto AA+ 200 0 0 0 0 0 0 00 0 0 0 0 00 00 -0 r-0 -0 -0 -0 -0 -0 -0 l-0 b- n- n- ay ct ov g ar ec p Ap Ju Au Fe Se Ja Ju O M M N D International Operations
Slide 59: Funding
Funding As at 31 December 2000 funding was: u 29 % from Retail via offshore group (Jersey / IOM) u 27% from Corporate, Government and Individual Clients u 4% from other Stanbic Group Banks u 15% from the wholesale markets u 16% from Capital / Subordinated Debt / Syndicated Loans u 9% from Repos Inte
Slide 60: Local markets
Local markets u Proprietary and client trading u Combination of interest rate and F/X risk - fixed income and derivative products u Focus on countries in which the bank has representation: s Argentina s Brazil s Czech & Slovak Republics s Turkey u But also: s Hungary s Poland International Operation
Slide 61: Local markets cont.
Local markets cont. u Intention to build small trading teams in key locations u Apply for relevant licences where necessary u Strategy is to develop capability to participate in development of domestic capital markets u Synergies with the trading and sale of hard currency external debt International
Slide 62: Standard Jardine Fleming Bank, Hong Kong
Standard Jardine Fleming Bank, Hong Kong Activities u Treasury u Commercial banking and structured finance u Wealth management International Operations
Slide 63: Standard Jardine Fleming Bank cont.
Standard Jardine Fleming Bank cont. Treasury u Market making and trading in Hong Kong government exchange fund bills and notes u Deposit acceptance and placement u Short-term currency swaps u Foreign exchange trading u US$ and HK$ debt instruments origination, investment, sales and trading u Currenc
Slide 64: Standard Jardine Fleming Bank cont.
Standard Jardine Fleming Bank cont. u Treasury division represents: s 76% of operating income s 68% of total assets s 73% of front office staff u Balance sheet US$1.7bn as at 31 December 2000 u Of which US$1.14bn in liquid assets International Operations
Slide 65: Rob Leith
Rob Leith International Operations
Slide 66: What do we mean by Private Banking?
What do we mean by Private Banking? u International è Private client business u High net worth u Affluent u South Africa è Transactional and wealth management for HNW market International Operations
Slide 67: Four facets to an integrated strategy
Four facets to an integrated strategy 1. Develop and expand Standard Bank Offshore Group (SBOG) 2. Development of Standard Bank International network 3. Acquisition 4. SA domestic private banking International Operations
Slide 68: Why Private Banking internationally?
Why Private Banking internationally? u Significant growth business globally u Low capital usage, high returns u Attracts high market rating u “Liability” focus è key part of SBL funding u Capture offshore move of SA wealth u SBOG provides a solid platform u Demand for services from regional offices
Slide 69: Four facets to an integrated strategy
Four facets to an integrated strategy 1. Develop and expand SBOG 2. Development of SB International network 3. Acquisition 4. SA domestic private banking International Operations
Slide 70: SBOG - History
SBOG - History 1992 Acquired Brown Shipley u Jersey u Isle of Man 1995 Acquired Standard Chartered u Isle of Man 1999 Acquired Lazards u Jersey International Operations
Slide 71: SBOG - Current activities
SBOG - Current activities JERSEY ISLE OF MAN ç Banking è ç Stockbroking / investment management è ç Fiduciary services / trust è Fund administration 224 ç people è 100 International Operations
Slide 72: SBOG - Salient financial figures
SBOG - Salient financial figures (£m) 2000 Shareholder funds 54.1 Profit after tax 11.5 RoE 22.8% Banking - deposit base 1 120 - risk assets 155 - funding for group 905 Investment management - funds managed 674 Fund administration - group 400 - third party 1 320 International Operations
Slide 73: SBOG - Ongoing development
SBOG - Ongoing development u Segmentation s private s priority u Move from “offshore” to “private” banking s relationship management s improve delivery u Service culture s external (clients) s internal (marketing offices) International Operations
Slide 74: Four facets to an integrated strategy
Four facets to an integrated strategy 1. Develop and expand SBOG 2. Development of SB International network 3. Acquisition 4. SA domestic private banking International Operations
Slide 75: International network - strategy
International network - strategy 1. In tandem with SIH - focus on offshore business - incremental approach 2. Utilise our core competencies for private clients Geographic Product - South Africa / Africa - Capital markets - fixed income - South America - Precious metals - Middle East - Trading orient
Slide 76: International network - strategy cont.
International network - strategy cont. 3. Utilise existing infrastructure - Marketing offices - Booking centres - Centralised processing 4. Optimise existing private client relationships - Capital markets - Treasury - Resource banking 5. Enhance product offering and delivery - investment products -
Slide 77: International network - proposed structure
International network - proposed structure MARKETING PRESENCE Client development PRODUCT SET SOUTH ASIA BANKING S.A. / LONDON MIDDLE AMERICA SBOG EAST - Taiwan - deposits Africa - Brazil - Jersey - Dubai - Singapore - debit card - IOM - Argentina - Turkey - Hong Kong - collateralised lending - Peru
Slide 78: International network - Asia
International network - Asia 1. JF Bank Wealth management - brokerage clients (#) 450 - leverage book (US$m) 60 Private client deposits (US$m) 286 2. SLA (Hong Kong) Private client deposits (US$m) 23 3. Taiwan Private client deposits (US$m) 95 International Operations
Slide 79: International - financial impact
International - financial impact 2001 Budgeted loss after establishment costs 2002 Forecast small loss / breakeven 2003 Forecast profits International Operations
Slide 80: Four facets to an integrated strategy
Four facets to an integrated strategy 1. Develop and expand SBOG 2. Development of SB International network 3. Acquisition 4. SA domestic private banking International Operations
Slide 81: Acquisition
Acquisition u Constantly evaluating opportunities u Criteria s client base s infrastructure s international brand s product provider s geographic presence u Reluctance to overpay s we have the base to build from International Operations
Slide 82: Four facets to an integrated strategy
Four facets to an integrated strategy 1. Develop and expand SBOG 2. Development of SB International network 3. Acquisition 4. SA domestic private banking International Operations
Slide 83: SA domestic private banking
SA domestic private banking u Integrated offering for s wealth management s lending s transactional banking u Retain “wealth management” of client base u Integrated with international offering u Focus on service levels International Operations
Slide 84: Private banking - conclusion
Private banking - conclusion u Attractive opportunity for the group s internationally s domestically u Leverage off existing business s clients s infrastructure s products u Good base to grow from s domestic s offshore International Operations
Slide 85: Neil Holden, Paul Smith
Neil Holden Paul Smith International Operations
Slide 86: Agenda
Agenda s Risk oversight function s Philosophy s Governance and organisational structure s Human and IT resources s Skills s Risk management s Risk appetite s Economic capital allocation s Diversified and mitigated credit risk s Diverse but complex market risks - controlled by experts s Controlled op
Slide 87: Philosophy - concentrate on intersecting risk
Philosophy - concentrate on intersecting risk International Operations
Slide 88: Group governance & organisational structure
Group governance & organisational structure Board of Directors Board Credit Board Audit Board Risk Committee Committee Management Committee Group Chief Executive Country Risk Group Risk Committee Group Decentralised Functions Group Internal Risk New Risk Compliance Audit Management Products Manageme
Slide 89: Governance & organisational structure
Governance & organisational structure P Smith PC Prinsloo B Ursell Group Risk CEO BRMC N Holden Risk (2) S Spencer M Morgan P Lawton B Lovell G Bell Interna Market Legal Docs & Credit Country Risk l Audit Risk Compliance (11) (7) (11) (23) (1) D Walsh R Jones C Bell Operational Deputy- Legal & Docs
Slide 90: Skills - senior management team
Skills - senior management team u 146 years total finance services industry; u Hard skills percentages below: FSA IT Econ/Cr Lang Business Legal Acct Maths 0% 20% 40% 60% 80% International Operations
Slide 91: Risk Appetite - know thy transaction
Risk Appetite - know thy transaction u Country / transfer risk s Independent analysis, scoring & limit determination; s Limits linked directly to economic capital concentration; s Stanbic approval via Group Credit Committee; s In-country due diligence and local presence; u Credit risk s 4-eyes princ
Slide 92: Country risk analysis
Country risk analysis Argentina Inflation yoy % ch Political 3 Fiscal Balance Distbn 2 % GDP 1 Real interest 0 Ext Debt Svce rate - %GDP -1 % Exports -2 -3 Curr. Acct. + DFI Total Ext. Debt % GDP % GDP Current Account Total Ext. Debt % GDP / Exports ST For Debt Reserves / FX Reserves / Imports Inter
Slide 93: Country risk analysis
Country risk analysis Inflation Turkey yoy % ch Political 3 Fiscal Balance Distbn 2 % GDP 1 Real interest 0 Ext Debt Svce rate - %GDP -1 % Exports -2 -3 Curr. Acct. + DFI Total Ext. Debt % GDP % GDP Current Account Total Ext. Debt % GDP / Exports ST For Debt Reserves / FX Reserves / Imports Internat
Slide 94: Risk Appetite - know thy market
Risk Appetite - know thy market u Market risk s Explicit risk appetite set in value-at-risk terms; s Not value-at-risk junkies, sensitivity limits, cash limits, stress testing, common sense - all are employed; s Complex risks controlled with complex systems by experts with “quant” support; s Liquidi
Slide 95: Risk example - leverage / client finance
Risk example - leverage / client finance u How could we lose money? s Value of leveraged asset falls below cash advanced s Counterparty unable or unwilling to honour deal s Cannot sell the security to replace the counterparty s Get sued after successful close-out by upset client u How do we mitigate
Slide 96: Risk example - mine finance & hedging
Risk example - mine finance & hedging u How could we lose money? s Project fails to perform s Country risk / transfer risk s Failure to syndicate s Commodity price falls render project uncommercial s Project cannot meet hedging margin calls u How do we mitigate these risks? s Formal assessment and r
Slide 97: SIH - economic capital usage March 2001
SIH - economic capital usage March 2001 8% 3% C re d it -N . Am e ric a 7% C re d it - As ia C re d it - S o u th Am e ric a C re d it - E u ro p e C re d it - E a s te rn E u ro p e 6% 42% C re d it - Afric a C re d it - Mid d le E a s t 3% Ma rk e t - E n e rg y Ma rk e t - Me ta ls Ma rk e t - O
Slide 98: Spare capital is there for a reason
Spare capital is there for a reason…. u Focused purchases that support the strategy (e.g. Jardine Fleming bank); u Balance sheet diversification (e.g. Asset Portfolio Group); u Organic Growth of existing businesses. International Operations
Slide 99: Market risks are sliced & diced...
Market risks are sliced & diced... International Operations
Slide 100: Market risks are sliced & diced...
Market risks are sliced & diced... International Operations
Slide 101: Operational risks under control
Operational risks under control O p e r a tin g R is k L iq u id ity R is k M a r k e t R is k P e o p le P ro c e s s S y s te m s E x te rn a l S y s te m ic L o s s o f fu n d s M anagem ent M e a s u re m e n t R e c r u it & re t a i n P roduct S y s te m s fa ilu re C rim ina l a c tivitie s L
Slide 102: David Munro
David Munro International Operations
Slide 103: Global core competencies
Global core competencies u Advise, arrange & participate in provision of “non-vanilla” equity and debt both on a principal and managed fund basis including: s Limited and non recourse project finance s Asset based finance s Securitization s Alternative off balance sheet funding s “Advantaged” lendin
Slide 104: Scope of the global business
Scope of the global business u 68 front office professionals u Located in 5 locations: u Johannesburg u London u Cape Town u Sao Paulo u Stockholm u Own funds invested approximates R15bn u 18 “on-going” advisory mandates globally with total value of in excess of USD1.5bn International Operations
Slide 105: Scope of the global business cont.
Scope of the global business cont. u Invested in 10 countries: s South Africa s Namibia s Mozambique s Tanzania s Zambia s DRC s Mali s Cuba s United States s United Kingdom International Operations
Slide 106: Scope of the global business cont.
Scope of the global business cont. u Hold advisory mandates in 14 countries: s South Africa s Mozambique s Tanzania s Uganda s Cameroon s Nigeria s Ivory Coast s Czechoslovakia/China s Brazil s Turkey s Israel s Ghana s Rwanda s Gabon International Operations
Slide 107: The global business philosophy
The global business philosophy u Structure of the businesses overarches the legal entities of the group u “Global business” strategy by simple rules: s Each business unit must have a clear mandate s Don’t confuse product focus with geographic focus, both important s Clarify reporting lines and doubl
Slide 108: Clear mandates for each business unit
Clear mandates for each business unit Project Finance Division Project Finance Structured Finance Advisory Investment Facilitation Investment Lending Securitization Derivative based Investment vehicles Aviation finance Funds management Strategic Assets Export credit agencies Strategic transaction In
Slide 109: Don't confuse product & geographic focus
Don’t confuse product & geographic focus Example: Project finance Project Finance Division Project Finance Structured Finance Advisory Investment Lending Geographic focus Sector Focus Investment vehicles South America Infrastructure Funds management Africa Power Export credit agencies S & E Europe O
Slide 110: Clarify reporting lines
Clarify reporting lines Example: Project finance Project Finance Division David Munro Project Finance Structured Finance Simon Morgan Advisory Investment Lending Geographic focus Sector Focus Greg Ansermino Investment vehicles David Munro South America Infrastructure Paulo Arbex Alastair Campbell Fu
Slide 111: Double focus on people
Double focus on people u In two years we have gone from 3 directors to 8 directors... u ...with a strong emphasis on business ownership… u ...freeing up senior management to focus on the human capital development as the critical success factor. u Clear succession plans are in place for each business
Slide 112: Educate leaders to deal with challenges of a global business
Educate leaders to deal with challenges of a global business u Monthly strategic meetings u Continuous interchange of management information at senior level u Extensive use of external and internal mentoring u Continuous dialogue on issues facing global businesses with strategic alliance partners u
Slide 113: Segment your skills sets according to your market
Segment your skills sets according to your market Market South Africa Africa S & SE Europe S/E Asia South America Skills set required Advisory Advisory Advisory Advisory Advisory Lending Lending Lending ECA ECA Centres used to Johannesburg Johannesburg London London Sao Paulo deliver required skills
Slide 114: Understand why you can compete in a new market
Understand why you can compete in a new market u Example: BRAZIL u Putting Brazil in perspective: s 170 million people s 8th biggest economy in the world s 2000 FDI exceeded $40bn s Land size equivalent to SADC u Snap shot of the opportunities in Brazil: s Power shortage: 56 new Thermo generation un
Slide 115: So why can we compete in Brazil?
So why can we compete in Brazil? u Example: Uruku/Porto Velho gas pipeline project u Details: s Gas transportation pipeline s 550km long s Transport gas from Uruku gas fields to new Thermo generation plant at Porto Velho s Total cost: $250m s Provider and Off taker: Petrobras u EPC contractor: Dufer
Slide 116: Continuously leverage local competitiveness with global experience
Continuously leverage local competitiveness with global experience Examples u Experience in toll roads in Spain used in South Africa u Experience in telecoms in Africa used in Brazil u Experience in pipelines in Africa used in Brazil, South Africa u Experience in power in Africa used in South Africa
Slide 117: Conclusion
Conclusion The Project and Structured Finance business is managed and will continue to grow as: u a global business u spanning both Standard Bank London and SCMB u drawing on the skills and resources that the group has available u leveraging off each of the group’s geographic platforms u operating i
Slide 118: Ben Kruger
Ben Kruger International Operations
Slide 119: Historical Constraints
Historical Constraints u South African political and economical development u Exchange control u International invasion u Parallel development International Operations
Slide 120: Complementary Capabilities
Complementary Capabilities Products and skills more important than geography • Interest rate derivatives • Credit derivatives International SCMB • Foreign exchange (domestic) • Project and structured finance • Private banking • Structured trade finance • Resource banking • Asset Management Africa In
Slide 121: Current Drivers
Current Drivers u Group Strategy u Leverage of combined intellectual capital u Limited cost benefit u Liberation from geographical constraints u Ability to roll out successful business models International Operations
Slide 122: What are we hoping to achieve?
What are we hoping to achieve? u Create maximum shareholder wealth through: u building a bigger sustainable business u maximising portfolio effect of earnings u reducing revenue volatility u remaining focussed on core business strategies International Operations
Slide 123: How do we set about achieving the above?
How do we set about achieving the above? u Increase client focus u Invest in appropriate technology u Employ and nurture top resources u Optimise capital utilisation International Operations