The chairman statement which caused all the trouble


Changing business practices both locally and internationally lead us to believe that the age of accountability has dawned as business starts to face its responsibilities to society and the environment.

In South Africa the introduction of King lll has created a heightened awareness of corporate governance and an increased focus on sustainable business practices. Companies are now required to report on their financial, social and environmental performance on an integrated basis. Internationally the consequences of the global financial crisis have led business to reexamine its responsibility to the society in which it operates.

Corporate accountability extends beyond being answerable only to shareholders.

Stakeholders include employees, clients, suppliers, trading partners, along with families and communities, all of whom stand to gain from the success of a business or lose when it fails.

The leaders of any institution are responsible to ensure that the rights of stakeholders are protected and enhanced. This responsibility, however, is mutual as it is up to stakeholders to defend their rights and hold boards and management accountable.

Corporate governance is grounded on an ethical foundation and we all have a duty to ensure that business is ethical and that stakeholders can exercise influence for the better.
Ethics and corporate accountability
The role of leadership in a corporation falls to the board of directors, and their goal should be to achieve longterm value through sustainable business practices that achieve profits, meet the needs of communities and conserve the environment.
Nedbank Group has an Ethics and Corporate Accountability Framework that guides behavioural practices, and during the past year the ethical foundation was strengthened across the business. This included the revision of the Nedbank Board Ethics Statement, creating a userfriendly Nedbank Code of Business Ethics and Code of Conduct, and the development of a Nedbank Pledge to be signed by all staff. The directors are required to sign the Board Ethics Statement annually to demonstrate their continued commitment to the group’s values and ethical conduct.

In compliance with the Companies Act and the recommendations of King lll the mandate of the current Transformation and Sustainability Committee has been extended to incorporate the functions of a social and ethics committee. The board committee is now known as the Group Transformation, Social and Ethics Committee.

Further detail on ethics and corporate accountability is contained in the Enterprise Governance and Compliance review.



The global banking environment deteriorated in 2011 as the European sovereign-debt crisis continued to unfold, leading to a loss of economic growth momentum in both developed and emerging markets.

Gross domestic product (GDP) growth for 2011 was 3,1%, and while this was up from 2010, it remains well below the level needed to make a material difference to job creation in the country.

Interest rates have remained constant in 2011 at 37-year lows.

Household demand for credit remained stable and transactional demand continued to strengthen, supported by real wage increases.

Business confidence remained at low levels for most of 2011, with corporate credit demand gaining some traction towards the end of the year as both private and public sector fixed-investment activity increased off a low base.

The challenges of climate change and the resulting energy-water-food nexus impact all of our stakeholders. We are attempting to address this through our integrated approach to sustainability.


One of the major socioeconomic and political challenges facing our country is addressing unemployment and creating jobs. While these issues are priorities on the national agenda, it should be acknowledged that there are few cases in the world where government and big business have been able to create jobs on a large scale. Job creation is also stifled if our economy is not expanding.

The issue needs to be addressed by focusing on entrepreneurship. Government should create an enabling environment with minimal regulation to enable entrepreneurs to flourish.

Our education system is producing thousands of graduates each year, yet the lack of skills and experience make it difficult to accommodate these young people in the formal economy. At the same time local government and municipalities in many areas of our country are in dire need of efficient administration and management.

We believe government and the private sector should collaborate to create a programme to deploy these unemployed graduates and recently qualified people to local authorities for a few years. This would allow them to transition from theoretical training to gain practical experience and enhance their prospects in the job market. Corporate SA can play a key role in sponsoring these graduates for the duration of their employment in local government.

There are also many highly skilled and experienced company executives retiring at statutory ages of 60 to 63. Given the skills shortage in our country, we need to harness these skills to mentor and train the young graduates and those entering the job market for the first time.


SA is widely recognised for its liberal and enlightened constitution, yet we observe the emergence of a strange breed of leaders who are determined to undermine the rule of law and override the constitution. Our political leadership’s moral quotient is degenerating and we are fast losing the checks and balances that are necessary to prevent a recurrence of the past. This is not the accountable democracy for which generations suffered and fought.
Enterprise governance and compliance review 
The integrity, health, socioeconomic soundness and prosperity of SA is the collective responsibility of all citizens, corporate or individual. We have a duty to build and develop this nation and to call to book the putative leaders who, due to sheer incapacity to deal with the complexity of 21st century governance and leadership, cannot lead.

We have a duty to insist on strict adherence to the institutional forms that underpin our young democracy.


One of our longest-serving boardmembers and senior independent director, Chris Ball, retired during the year after reaching the mandatory retirement age. Chris is a banking man of infinite sagacity and was a pillar of strength during the bank’s transition. He served with distinction over more than eight years, the last four as our lead independent director. Chris always demonstrated decisive and independent thinking, and we wish him well in his retirement.

Malcolm Wyman was appointed as the senior independent non-executive director and also succeeded Chris as Chairman of the Group Audit Committee.

Alan Knott-Craig resigned as a non-executive director early in the new financial year following his appointment as chief executive of Cell C. Alan was the voice of innovation on our board and his expansive knowledge of the information technology and telecommunications industry has been invaluable to the group. Tom Boardman will assume the role of Chairman of the Group Information Technology Committee.

Thenjiwe Chikane has been appointed as Chairman designate of the Group Remuneration Committee and Gloria Serobe has been appointed as Chairman of the Group Transformation, Social and Ethics Committee.

Professor Brian Figaji will be retiring from the board following the annual general meeting in May 2012. Brian has been a stalwart and a stabilising voice of wisdom on the board over the past 10 years, and we will certainly miss his involvement at board and committee meetings.

We welcomed Mpho Makwana as an independent non-executive director. He has a wealth of diverse knowledge gained in the communications, banking and public sectors, and we look forward to benefiting from his experience.

Following the recent changes, the board now comprises 16 directors, with 13 being non-executive and seven of these classified as independent in terms of King lll. We are currently canvassing potential board candidates with industry and legal expertise.
Group strategy 

Macroeconomic conditions remain uncertain with downside risk, mainly as a result of the indirect effects of the European economic slowdown. SA’s GDP is currently forecast to grow by 2,7% in 2012, but remains dependent on international developments. While SA’s GDP growth lags that of its BRIC peers, it remains well ahead of many European and American markets.

Given that confidence is anticipated to remain fragile, private sector fixed-investment activity is expected to remain modest. However, government and public corporations are forecast to escalate their infrastructure spending, which should contribute to improved wholesale advances growth.

For guidance on the group’s targeted performance for 2012 refer to theChief Executive’s Report
Infrastructure was identified as a priority in the President’s State of the Nation address and in the Minister of Finance’s recent budget speech, and we encourage government to address this with a sense of urgency. We would also like to see the planned infrastructure projects being undertaken in collaboration with the private sector. Government partnered most successfully with the private sector to deliver large-scale infrastructure development ahead of the football World Cup in 2010.

Consumer spending is anticipated to moderate as concerns about inflation, house prices and job security prevail. Transactional demand should remain robust, while credit demand is likely to improve slowly off a low base as consumer balance sheets strengthen and debt levels decline. Interest rates are expected to remain flat, with a possible increase in the fourth quarter of 2012.

In this uncertain global environment Nedbank Group offers qualities that we believe are attractive to investors and should support continued earnings growth due to:

  • Nedbank Group being one of the country’s big four banks, with SA banks ranked second in the Soundness of Banks category in the 2011 Global Competitiveness Survey undertaken by the World Economic Forum;
  • a strong, well-capitalised balance sheet with a prudent funding structure and sound liquidity;
  • a strong wholesale banking franchise generating high returns on equity (ROEs);
  • our strengthened and growing retail franchise;
  • our growing wealth management business yielding high ROEs;
  • the group’s proven ability to manage costs over time;
  • our growing primary-client base;
  • sound risk management practices;
  • the group’s stable and experience management team; and
  • good staff morale and a values-based culture.


On behalf of my board colleagues I thank Errol Kruger who retired as the Registrar of Banks in July 2011. Errol was cooperative, meticulous and thorough in rising to the challenges of the job, and was always firm without being rigid. His role in ensuring that the domestic banking industry emerged relatively unscathed from the global financial crisis should never be underestimated. We also welcome Errol’s successor, René van Wyk, and wish him well.

Thank you to my fellow directors for their insight and commitment to the affairs of the group. I congratulate Mike Brown and his Group Executive Committee on the excellent all-round performance in 2011. Mike has demonstrated bold and decisive leadership and heads a motivated and highly energised team who have created a strong growth momentum in the business. This ensures we face the year ahead with confidence.

Our staff are continually striving to exceed the expectations of our stakeholders and we thank them for their contribution in making 2011 a year of record earnings for Nedbank Group.

Dr Reuel Khoza


This statement was copied and pasted as it is, save for the headline, from Nedbank’s online copy of integrated annual report. The original report is available at:


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