Investec doesn't make layoffs - it redeploys. And it's still hiring, selectively
The world is still a tough place for banks, says Investec Ceo Stephen Koseff, and very few in the business would beg to differ.
The Johannesburg and London-listed bank expects investment and trading income to decline slightly in sterling terms over the next few months, despite the “solid growth” in fees and commission income. “The decline in income is all to do with the rand, which has depreciated, and not necessarily to do with our business performance,” says Koseff. “Up to 60% of our income is from South Africa and the rand has already had an impact on us this year of about 15% on average.”
The South African business is powering ahead but it is being penalised by the weak rand, which has declined following unrest in the mining industry and some negative economic data. Investec has decided to consolidate its equities operations in South Africa, creating one integrated specialist equities business and concentrating on “relevant research in chosen niches”. Research will be focused on metals and company coverage, while coverage of banks has ceased. “In banking we’re a competitor,” says Koseff. “It’s not really a place for us.” However, – in true Investec style - star banking analyst David Kinsey has not been laid off but redeployed within the group.
Investec is known for looking after its people: “We don’t have any trouble in attracting decent talent,” says Koseff. “We have 4,000 people in South Africa and about 70% of them are graduates who are highly skilled, if not more.” But given the present headwinds, the bank is only hiring selectively. “We are not looking to increase headcount in any particular area,” says Ursula Nobrega, head of investor relations at Investec in Johannesburg. “We may have select recruitments in certain areas but we also have natural attrition so overall we would not expect headcount to grow.”
This may change when, as Koseff puts it, “there will be no wind instead of headwinds”. It might not take too long: “Investec should see stronger growth for the full-year results to March 2103 and should recover very strongly as soon as the global economic recovery gains some traction and confidence returns to global markets,” says Adrian Cloete, equity analyst at Cadiz Asset Management in Cape Town. “At some time the world will be a happy place again and we will get a turnaround,” says the ever-droll Koseff. “Maybe we will start making money”.
