South African banks face challenging times, says Johan Burger, CFO of FirstRand Limited. “We are now faced with regulatory changes that have been driven by issues emanating from the past, which played out in global markets, but not necessarily in our home market. In many cases these changes will be a challenge to implement in South Africa, as they seek to fix problems that don’t exist here.”
Listed on JSE since its founding in 1998, FirstRand Limited is one of the largest financial institutions in South Africa and the holding company of the FirstRand group of companies. The company employs over 35,000 people and provides banking and insurance products and services to retail, commercial, corporate and public sector customers in South Africa and several African countries. The First Rand Group was established in 1998 FirstRand Limited was formed in 1998 - through a merger that joined Rand Merchant Bank Holdings with Anglo American's financial interests, which included First National Bank - from a business that started in the 1970s as an investment bank. In 2010 FirstRand was rated one of the five largest banking groups in South Africa and sub-Saharan Africa. FirstRand has a strong record of entrepreneurial acumen and being successful in new ventures.
While the Group is predominantly South African based and has its headquarters in Johannesburg, it has operations in the neighbouring countries, the United Kingdom, the Middle East and Australia. FirstRand Limited is listed under "Financial - Banks" on the Securities Exchange of the Johannesburg Stock Exchange Limited and the Namibian Stock Exchange.
Johan was born in Cape Town in 1958. He studied at the Rand Afrikaans University (now the University of Johannesburg) where he obtained a BComm (Hons) in accountancy. He qualified as a Chartered Accountant in 1984 with PWC and joined RMB in 1986, where he had a number of roles in the investment banking business. In 1995 he was appointed financial director of RMB. In 1998, RMB merged with the financial services businesses disposed of by Anglo American Corporation (namely FNB, WesBank and Southern Life) to create one of South Africa's largest financial services groups, FirstRand Limited. At that point Johan was appointed CFO of the banking businesses and in 2002 was appointed CFO of the Group, which position he currently holds.
Through its portfolio of leading franchises, FirstRand provides retail, corporate and investment banking products and services in South Africa and a number of other African countries. The Group's market capitalisation on the JSE exceeds R120 billion.
In 2009, Johan was appointed as FirstRand Limited's Chief Operating Officer and now holds the position of Group COO and CFO. In this role his responsibilities include group strategy formulation, the optimisation of the portfolio of operating franchises, financial management and financial resource planning including the capital management, liquidity and funding strategies. He serves on the following Group committees: Strategy Committee; Executive Committee; Audit Committee; Credit Committee and Risk Committee. He also serves on the following Group boards: FirstRand Limited Board, RMB advisory board, FNB advisory board and WesBank advisory board. Outside of the Group he serves on the Board of MMI Holdings.
Johan is married to Winnie and they have three children. His other interests include golf, the bush, overseas travel, reading and music.
1) What do you enjoy most about your job?
Managing the CFO portfolio enables me to drive value creation in a world of ever more limited and expensive financial resources. I enjoy the complexity of my role and the fact that I have an integrated perspective (or "helicopter view") of the many moving parts of the business and, when necessary, the ability to influence strategic and operational outcomes.
2) How do you perceive the role of the CFO has changed in the last five to ten years?
The CFO role is less about "crunching the numbers", it is more about influencing the business to achieve the desired financial outcome. Ultimately it has become a far more strategic portfolio.
3) How do you see the role of the CFO evolving in the next say five to ten years?
I think it will increasingly need to focus on the dynamic management of financial resources such as capital, funding and risk, to achieve our strategic goals.
4) Would you say that accurate forecasting and budgeting is still feasible for a financial department in today's tumultuous financial markets?
Absolutely! Forecasting and budgeting remains a key component of financial discipline. Managing volatility is all about understanding the composition of your business portfolio and how you expect it to perform within cycles and relative to strategy.
5) What do you see as the greatest challenge for South African companies in the global economic situation and for your industry in particular?
South Africa is certainly no longer disconnected from the global operating environment and therefore what happens in other international markets has an impact on our economy and therefore our business performance.
In addition, particularly for banks, we are now faced with regulatory changes that have been driven by issues emanating from the past, which played out in global markets, but not necessarily in our home market. In many cases these changes will be a challenge to implement in South Africa, as they seek to fix problems that don't exist here.
6) Which skill(s) do you think a finance professional should master to be most successful in his work?
As a starter, technical skills are the most important foundation for a successful finance professional. In addition, you increasingly need to understand the inter-play between financial resources, strategy, macro's and operations to optimise returns. In financial services, which is particularly reliant on people, a much higher level of "EQ" is now required.
7) Which achievement or project in your business career are you most proud of?
The one that particularly springs to mind is the way we have inculcated shareholder value creation as a key performance measurement across our entire business. In other words "driving returns on capital".
8) What must you do every single day to feel fulfilled in your work?
Personally my mantra is "don't leave the office unless you have done at least one thing during the day that makes the business better".
9) Who is your role model in life and why?
When it comes to business I have immense respect for Laurie Dippenaar, one of the original founders of FirstRand and its first CEO. He is the ultimate exponent of "the business case prevails" and has an uncompromising position on business ethics.
10) What vital piece of advice would you give young ambitious finance professionals?
"Only do what you are passionate about, it keeps you stimulated, motivated and inspires you to perform."
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category: Interviewing the CFO