Standard Bank CEO Ben Kruger and fellow CEO Sim Tshabalala at a Standard Bank annual general meeting in Johannesburg. Picture: JAMES OATWAY
Standard Bank CEO Ben Kruger and fellow CEO Sim Tshabalala at a Standard Bank annual general meeting in Johannesburg. Picture: JAMES OATWAY

What's a bank to do when it is selling off international assets while at the same time having to stave off rising competition in its domestic market?

If it cannot divide its chief executive in two, it puts two people at the helm.

Now in its fifth year, that is the solution Standard Bank tried when it appointed Sim Tshabalala and Ben Kruger as joint CEOs to succeed Jacko Maree. It's a decision that seems to be bearing fruit.

Since their appointment in March 2013, the 154-year-old bank's share has risen more than 40%, outperforming some of its main rivals. Barclays Africa declined 5.4% and Nedbank is only 14.19% higher over that period.

FirstRand, with its almost 77% appreciation, and Stellenbosch-based Capitec, with its more than 342% climb, are the only two with better figures.

"It's the outcome of the disciplined execution of a long-term strategy," Tshabalala said this week. "Ben and I followed Jacko Maree as the CEOs, and Jacko always used to say we are stewards and beneficiaries of a long-range strategy which was formulated in the 1980s."

Tshabalala and Kruger tweaked that strategy to navigate the once far-flung organisation through the reduction of its international emerging-market footprint to focus on Africa. Under the pair's leadership the bank has also had to try to slow down the loss of market share over the past decade to the banking success story that is Capitec.

Rugby teams too

Since its establishment in 2001, PSG-controlled Capitec has attracted 8.6-million retail customers, compared with Standard Bank's 12 million at the end of June.

Dual CEOs are not unheard of in the banking industry. Deutsche Bank, Goldman Sachs and Merrill Lynch used the structure at various points. Luxury goods holding company Richemont until recently also had two chief executives and chemicals company Sasol is led by Bongani Nqwababa and Stephen Cornell.

Even rugby teams have introduced shared captaincies to tread difficult water, so when Tshabalala and Kruger were asked by Standard Bank's board to work together, Tshabalala was not unfamiliar with the idea. For Tshabalala the move made sense, given the size and complexity of Standard Bank's operations.

"That usually happens when you have a structure where there are lots of subsidiaries, lots of businesses and lots of travel," he said.

"The PRA [Prudential Regulatory Authority] in the United Kingdom wants to see the group chief executive. In Nigeria the nature of the issues we were dealing with - the authorities and the client - wanted to see the CEO. Our relationship with [our] important shareholder ICBC [Industrial and Commercial Bank of China] needs a CEO."

Liberty chairman Maree, who had headed Standard Bank for 13 years and had recommended that Tshabalala and Kruger join forces, said that at the time he was confident in the partnership's competency.

"I guess I knew the personalities and I didn't have any doubt that it would work given who they were. I don't think this type of structure is something that would easily work with different personalities."

Tshabalala, a lawyer, and Kruger, a chartered accountant, had complementary skill sets which enabled them to divide duties with ease in the beginning, Maree said.

Initially Kruger oversaw the bank's international operations while Tshabalala focused on the business in Africa. Over the years their duties have swapped back and forth.

Partnership's call

"Every year we have a conversation about the focus areas and who takes responsibility for what. Ultimately we are both responsible. I can't say, and I never will say, 'Sorry that was not on my watch or my call'," said Tshabalala.

"In the best relationships, or best marriages, it doesn't matter which partner has made the call. It's the partnership's call. The same applies here."

According to Tshabalala, the joint role has worked at Standard Bank because of its collaborative culture and the commonality of purpose between the two.

Comparing the bank's operation at the top to the flat structure of a law firm, Tshabalala said: "The senior partner is not senior in the sense that he's the boss. He's the conductor of the orchestra. Everybody else is a specialist and runs their own business.

"In our team there are at least four other people that could do this job today. I'm delighted to be able to say that, and I say that without fear of being contradicted."

According to PSG analyst Adrian Cloete, putting two CEOs in place helped Standard Bank retain important talent.

Safely steered

"If you've got two very competent people who are both good candidates for the CEO job and you pick one, the other guy invariably leaves," he said.

"Usually a single structure is what most shareholders are comfortable with, but I don't think you should cast it in stone. It depends on the company, how complicated it is and the individuals as well."

Now that Standard Bank has been safely steered out of dangerous terrain, the question is whether its joint CEO structure is still necessary.

Kruger, who is described by his counterpart as quintessentially a banker, turned 58 this year. He has two years to go before he reaches the executive retirement age of 60; in that year Tshabalala will turn 52.

Tshabalala said the needs of the bank would dictate the future of the arrangement.

When asked about the joint structure, Maree said: "I think it works, so don't change something that's not broken."

The bank this week reported an 11% rise in half-year profits, with headline earnings per share reaching 756.4c in the six months to June, compared with 680c in the same period in 2016.

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