FINAL RESULTS AS CEO
End of an era as Stephen Koseff lets go of the reins of Investec
An emotional Stephen Koseff had to take a moment’s pause as he drew to the end of his final results as CEO of Investec on Thursday.
It was always going to be historic. Koseff is letting go of the reins of a business he has spent the past four decades building. "I was worried that I was going to get a little bit emotional at certain points," Koseff, who steps down as CEO on October 1, told Business Day.
He grew particularly tearful when he said that he and cofounder Bernard Kantor were "proud and happy to hand over" the company to the next generation of leaders. Equally, when he thanked his wife, Sheryl, and son, Bradley, who were present.
In reflecting on the past 38 years, Koseff allowed "25 minutes of history".
He went back to 1981, the year after the group acquired its banking licence and began its steady expansion beyond leasing and instalment finance, primarily to doctors.
At the time, Investec had £97m in capital and £7m in deposits. Today, it has equity of £5.4bn and deposits of £31bn.
Its loan book has increased from £4.2m to £25.1bn, while funds under management are up from £17.4m to £160.6bn.
Chris Gilmour, an independent analyst, remembers having drinks with Koseff and Kantor in the early 1980s "in their squalid offices at the arse end of town".
"What struck me was the entrepreneurial spirit of the business. Today, it is still there," he said on Thursday.
Koseff, a no-nonsense leader who grew up in Benoni, embodies this spirit.
While it seems impossible to imagine the bank without him, he did not want to overstay his welcome.
"I’m not ready to stop working as an individual, but the time was right to hand over," Koseff said. It was important that Investec’s new leaders, who include joint CEOs Hendrik du Toit and Fani Titi, were still "fit and hungry" when they took over.
Koseff will not stray far.
He and Kantor will remain executive directors until March 2019, becoming nonexecutives on April 1.
Their roles will undoubtedly extend beyond board meetings even if, as Koseff joked, he had been banned from internal-credit committee meetings.
"I will help some of the guys on the ground on deals (which is historically my strength), if they need it, and with clients." Investec would also soon be migrating to "hot-desking, so I can sit anywhere", Koseff promptly said.
The new leaders would probably not want Koseff to "let go completely", Gilmour said.
Koseff, who received a standing ovation from the sizable crowd gathered at Investec’s Sandton headquarters, will be missed even by disgruntled shareholders.
Investec has disappointed relative to peers since its dual Johannesburg and London listing in July 2002. It has risen about 260%, beating only Nedbank (+171%). Barclays Africa (+500%), Standard Bank (+623%) and FirstRand (+988%) would have made better investments for investors.
Koseff has earned eye-watering salaries over this time. In 2017, according to the annual report, he was paid £3.4m. An additional £1.48m was awarded subject to future performance conditions.
Fortunately, he is very aware of his social responsibility. This is demonstrated by Investec’s commitment to the Youth Employment Service and Promaths, which provides extra tuition in maths and science to pupils in Grade 10 to 12 at select schools.
On shareholder returns, Koseff would prefer to compare Investec to UK rivals, such as Barclays and Royal Bank of Scotland, whose recovery from the global financial crisis has been far worse, even if Investec is still paying for its UK legacy. "There are things we shouldn’t have bought that we bought," he said, listing Fedsure in SA and mortgage lender Kensington in the UK.
But never one to dwell on his mistakes, Koseff is adamant that Investec’s foray into the UK will pay off in the long term. The value of the platform Investec had created had not yet been "properly recognised".
"Once we start delivering returns in the UK bank, then the whole valuation of the business will transform," he said.
Gilmour cautioned that UK private banking, dominated by the likes of Coutts & Co, would be "extremely tough to crack".
But Koseff is not perturbed, quoting Winston Churchill: "Success is not final, failure is not final: it is the courage to continue that counts." He said he would like to be remembered as "Stephen from Benoni".