In SA banking it's good to have friends in high places
Goldman Sachs has not had much good press recently, but in South Africa it has quietly landed a coup. Tito Mboweni, the well-respected former governor of the SA Reserve Bank, is to join as international adviser with a specific mandate to provide strategic advice on business development opportunities in Sub-Saharan Africa.
Mr Mboweni described it as "a very exciting move". Colin Coleman, head of Goldman's SA office and investment banking in sub-Saharan Africa, said the former central banker's "unique experience, wealth of wisdom and knowledge in the political and financial arenas will complement our capabilities in South Africa, sub-Saharan Africa and around the world." Africa is very much on foreign investors' radar screens and there is increasing competition among banks.
The move is good for Mr Mboweni. His position is non-executive but he will sit on the bank's prestigious international advisory board. It is also good for South Africa, says Phryne Williams, director of Capital Assignments, a financial services recruitment firm: "It is a great thing for the country to have a local prominent person representing us on an offshore bank's board."
But above all it is likely to be good for Goldman Sachs. Mr Mboweni, a former minister of Labour, is politically well-connected as well as financially astute. Given the US investment bank's recent troubles it could be argued that he is doing them a favour rather than the other way round. "It is critical for foreign banks to have local experts to understand the SA landscape and its complexities," says Williams.
Mr Mboweni is characteristically sanguine on the subject: "When your friends are in one difficulty or another you don't walk away from them." He regards GS as a friend because "when it was not fashionable it opened its doors to young African National Congress economists and took them for training in New York, exposing them to the world of financial markets." Mboweni, needless to say, was one of those young economists and has not forgotten the experience.
Nor has the ANC. Goldman Sachs was given responsibility for the ANC government's first bond issue in 1994 and has since been involved in many major deals, such as the purchase of a 20% stake in Standard Bank by the Industrial and Commercial Bank of China in 2008 and Barclays' acquisition of a majority stake in Absa Bank in 2005. Another former GS trainee in New York is Maria Ramos, Ceo of Absa.
GS still has a relatively small presence in South Africa compared to rivals like Deutsche Bank or JPMorgan. "There have been rumours that Goldman Sachs plan to grow their business substantially," says Williams. "All the foreign banks have been sensible enough to have local people involved but certainly not at the level of a Tito Mboweni." In the fiercely competitive world of SA banking, it helps to have friends in high places.
