Nedbank Group's investment banking arm last year grew its share of the corporate bond market in SA to 31%. This has firmly entrenched its market leadership position ahead of its three bigger peers - Absa, Standard Bank and Rand Merchant Bank - according to statistics from the Bond Exchange of SA (Besa).
Nedbank Capital's market share by transaction value also grew to 27%, the highest compared with SA's other top three banks, Besa figures show.
Between 2005 and 2007, Nedbank Capital controlled 31% of the bond market in SA, while it held 25% of the bond market by transaction value, Besa says.
WHAT IT MEANS
 Accounts for 21% of bank's total earnings
Finances mining, BEE, infrastructure deals
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Nedbank Capital, which was formed four years ago, grew its headline earnings from R800m in 2005 to R1,27bn last year, reflecting a compound growth rate of 18%.
With a head count of 600 people or 0,5% of Nedbank Group's total staff complement of 25 000, Nedbank Capital now accounts for 21% of the total earnings of SA's fourth-biggest lender.
Nedbank Capital MD Brian Kennedy says Nedbank Capital's return on equity (ROE) also increased, from 27% to 38% during the same period.
The investment bank handled transactions in 21 African countries last year and financed a number of mining deals overseas, Kennedy says.
The company's success is attributable to its policy of clearly segmenting its market according to key sectors and developing products and services that meet the needs of its diverse client base.
Nedbank Capital's sector focus includes financing mining, infrastructure, power, energy and BEE deals both in SA and the rest of the African continent, Kennedy says. They are also involved in structured trade and commodity finance on the continent.
"We have been quite good at innovating and creating new products. We are the only bank trading in contracts for difference in the SA market," Kennedy says. "Our trading businesses have also played a pivotal role in generating unique client solutions across a spectrum of asset classes. And we expect to expand our presence and capabilities in London through our branch operation there."
Achieving the delicate balance between economic objectives, social upliftment and environmental responsibility is something Nedbank Capital strives for, as an integral part of its strategy.
"To encourage similar pursuits in the mining sector, we launched the Green Mining Awards for Sustainability in Mining & Mineral Beneficiation in 2006. Last year we invited entries from across the African continent, which demonstrates our deep commitment to developing business in Africa," says Kennedy.
"Nedbank became the first African bank to adopt the Equator Principles, which provide a guideline for banks to ensure that the projects they finance are developed in a socially responsible and environmentally sound manner.
"The principles have clearly affected the manner in which project finance is taking place in emerging markets. We believe we are now in a strong position to be the partner bank of choice for other bank signatories in African deals, and to share skills and knowledge in this interaction," he says.
Nedbank Capital has also won a number of awards over the years, including the Banker Deal of the Year 2007 Award for Africa and SA, for the Exxaro deal; and the Project Finance's African Communications Deal of the Year 2007, for the Seacom undersea cable deal.
Nedbank Corporate
Nedbank Corporate MD Graham Dempster says the unit, which employs more than 6 000 people in SA and at its African operations, last year earned just more than R3bn - about 50% of Nedbank Group's total earnings.
Nedbank Corporate has 25% of SA's commercial and industrial property finance market and holds a significant share of the business and the corporate banking market in the country, he says.
According to Dempster, the success of Nedbank Corporate was anchored in getting the right team in place, in terms of skills, experience and people with the right value systems.
And what was fundamental in building the team was the creation of a bank-wide environment and philosophy of mutual respect and collaboration between the product, transactional banking, shared services and the systems development personnel.
"You had to have people who respected one another and had a collaborative approach to business. And that was the real key for us in getting the team together," he says.
Though Nedbank Corporate's three SA divisions - Business Banking, Corporate Banking and Property Finance - are strong players in their respective markets, the business is making sure that its strong position is entrenched through the calibre of its people and its products.
Nedbank Corporate's approach of decentralisation has helped unleash the creative energy in its staff as this gives them the responsibility and the drive to perform. "This business model - where decisions are taken by people on the ground who are close to the clients and know their needs - gives rise to quicker and better decisions that provide the right solutions to clients.
"That was the fundamental philosophy behind decentralisation - unleashing the power of people by recognising that they are capable and wish to be responsible for their businesses.
"Naturally that drove them to create a team environment in areas such as sales, credit and operations. But when you have a decentralised business model you need very clear guidelines as to what the business model is and what the levels of authority are and people must respect that," says Dempster.
Over the past four years, Nedbank Corporate made significant investments in people - through the recruitment and promotion of talented staff and in team dynamics, including personal mastery and team effectiveness.
Nedbank Corporate also invested in management development programmes for its management staff. Ingrid Johnson, the MD of Business Banking, did the advanced management programme at Harvard Business School in 2005; Corporate Banking MD Mfundo Nkuhlu is currently attending the same course.
Nedbank Property Finance MD Frank Berkeley is on an Old Mutual Plc management development programme that brings together people from across the globe for an 18-month period to learn from experts in developing managers of business.
Nedbank Corporate also invested in technology. Says Dempster: "In 2004 we took the decision to build, from scratch, a new electronic banking platform for our wholesale banking clients and we invested more than R100m.
"It was one of those investments that builds the business for the long term. We have spent the past 18 months migrating clients and the feedback from them has been exceptional.
"We have also invested in various products such as cash vaults or cash acceptance terminals and these enable clients to handle cash securely."
Nedbank Corporate also invested in infrastructure, establishing offices in Mthatha, Khayelitsha, Soweto, Midrand, Benoni and in new territories where the small to medium enterprises (SMEs) market is growing strongly.
"We have invested significantly in transformation in its broader sense, changing the profile of our staff, particularly management. Nedbank Corporate is also responsible for enterprise development, for emerging farmers and affordable housing developments," Dempster says.
Overarching everything that Nedbank Corporate does, he says, is a very simple philosophy of client-centricity, which demonstrates that the company wishes to be the primary banker to clients.
"We do not have a monoline product-centric approach. We are looking at satisfying the needs of clients across the banking spectrum - whether those products and services are delivered directly from Nedbank Corporate or even the investment bank, the card division or through the branch network," Dempster says.
Nedbank Corporate's focus on decentralisation was one of the key drivers of Nedbank Group's successful turnaround, he says.
"We have seen the early success of the decentralisation policy in that earnings at Business Banking in Nedbank Corporate over the past three years have grown at a compound growth rate of 36%. This means that the business is now more than two and a half times the size it was three years ago," Dempster said.
Nedbank Corporate's initial focus on the public sector has started to bear fruit after it was successfully awarded the Western Cape provincial government's banking account in December 2006.
Dempster says this took the market by surprise. "Cynics felt we would have difficulties in servicing the account, but the client has described the transition (from one bank to another) as a nonevent. It went smoothly.
"On the back of that we have had significant wins in municipalities across the country and other public sector accounts in the Western Cape."
SA is a developmental state and in that regard the public sector will continue to play a major role in building infrastructure. By being closely involved, Nedbank is in good stead to make a contribution to the growth and development of the country.
Though the property market is currently being affected by high interest rates, Nedbank Corporate's dual approach of being a lender of industrial and commercial finance as well as partnering clients through its property investments, enables Property Finance to identify investment opportunities. That has proven to be particularly successful over the past five years, he says.
The other African countries Nedbank Corporate operates in are Namibia, Lesotho, Malawi, Swaziland and Zimbabwe, and Denys Denya, the MD of this business, has plans to expand further into selected markets in sub-Saharan Africa, Dempster says.
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