First National Bank of Southern Africa Ltd

Abstract

First National Bank (FNB) of Southern Africa Limited is South Africa's oldest bank and counts among its clients the Johannesburg Stock Exchange, the Johannesburg municipality, and several of the country's leading corporations. FNB, one of the Big Four banking groups in South Africa, is the market leader in terms of return on assets and has consistently reported real earnings growth despite 4 years of national economic decline. FNB has a nationwide network of 800 branches and offices. Major strides have been made in establishing the group as a truly international operation. FirstCorp, FNB's merchant banking subsidiary, is the second largest contributor to the group's net income, after the commercial bank. FirstNet, FNB's specialist value added network service subsidiary, offers South African customers Europe's leading electronic data interchange service - TradaNet - which allows companies to link their computers with those of their trading partners. FNB is pioneering several technologically driven products that could result in a new level of banking convenience for customers.

FIRST NATIONAL Bank of Southern Africa Limited is South Africa's oldest bank and counts among its clients the Johannesburg Stock Exchange, the Johannesburg municipality and several of the country's leading corporations.

Its major shareholders are Anglo American Corporation, the country's largest mining and industrial conglomerate, Southern Life, a leading insurance company, and DeBeers, the world's leading diamond company.

FNB, one of the Big Four banking groups in South Africa, is the market leader in terms of return on assets and has consistently reported real earnings growth despite four years of national economic decline.

FNB has a nationwide network of 800 branches and offices and over 900 automatic teller machines, emphasising its commitment to service convenience. It is the world's largest user of the Hogan integrated banking software, which offers customers detailed account information while providing managers with a low-maintenance tool with which to manage their books.

FNB's computer and office automation systems compare with the best in the world. A programme is in place to fully automate the branch network and so far, some 200 branches have been converted.

Its 26,000 staff are drawn from the entire spectrum of cultures represented in South Africa. All have a common purpose: to strive for service excellence and realise their career aspirations within the group.

The opening earlier this year of BankCity, the group's new corporate headquarters, was a milestone in FNB's history. Spanning six city blocks in downtown Johannesburg, BankCity's elegant architecture retains the character of early Johannesburg, contributing to a revitalisation of the central business district. Behind the old world facade is some of the most sophisticated office accommodation in the country. incorporating state of the art ergonomics and aesthetic surroundings. Formal and informal trading is accommodated at street level.

Group assets have grown 30% to nearly R50bn over the last 28 months through a combination of organic growth and increased market share. Pre-tax income for the year to September 1992 grew 17.6% to R759.2m. The return on assets for the first six months of 1993 was 1.4%, some 47.4% upon the previous year.

The bank raised R550m through a successful rights issue last year, which was used in part to finance off-shore acquisitions and improve the group's capital strength.

Major strides have been made in establishing the group as a truly international operation.

UK merchant banking group Henry Ansbacher Holdings plc was purchased in 1992 for L57.8m--the largest off-shore acquisition ever made by a South African banking group. With that came the Guernsey-based Ansbacher International Trust Group. The acquisition gives FNB a significant presence in the UK, the Caribbean and the Channel Islands offering the full range of merchant banking services, from corporate finance to treasury, and short-and medium-term lending.

FNB is already represented in Botswana, Namibia and Malawi, and also has a representative office in New York. In 1993 FNB became the first South African banking group to be granted a Swiss banking licence, culminating in the opening of the bank's Zurich branch. The branch will focus on international trade finance for its existing Southern African client base while introducing new European clients to Southern Africa.

In April 1993 FNB announced the acquisition of Hong Kong-based Midlantic (Asia), which was owned by Midlantic National Bank of Edison, New Jersey. The bank was subsequently renamed FNB(Asia) Limited.

These acquisitions place FNB firmly on the international banking map, with physical representation on four continents and a network of correspondent banks across the globe.

Political and economic isolation compelled South African banks to focus on the domestic market. However, with the remaining vestiges of economic sanctions likely to fall away in the coming weeks, the door is opening to new trade and investment possibilities. FNB is well positioned to take advantage of these developments.

FNB has long campaigned for race and gender equality in the workplace, a stand which has earned it widespread acceptance in the mass market.

FNB's social investment activities support over 900 community projects aimed at improving living standards among the disadvantaged members of its communities. In partnership with the Foundation for African Business and Consumer Services, FNB launched FutureBank Limited in 1992 to cater for the needs of the mass market. FNB's Small Business Unit has put scores of budding entrepreneurs on the road to financial independence. The activities of the Small Business Unit have resulted in the creation of more than 1 ,000 jobs.

FNB offers the full spectrum of banking and financial services, from treasury to corporate banking, asset finance, foreign exchange, retail banking, mortgage lending, personal loans and overdrafts, merchant banking, financial and estate planning, mutual trust management, insurance and personal financial planning.

FirstCorp, FNB's merchant banking subsidiary, contributes slightly less than 8% of the group's net income. It is the second largest contributor after the commercial bank. FirstCorp comprises four divisions:

* corporate finance, specialising in mergers, acquisitions and corporate restructuring;

* treasury, which trades in derivatives, money market and capital and foreign exchange markets;

* equity and leveraged capital division, the market leader for management buyouts and leveraged deals; debt restructuring.

The Corporate Banking Division, through its six branches, has an annual turnover in excess of R100m. Its major markets are financial engineering, electronic delivery products and relationship banking.

FNB's Treasury and International division handles foreign and money market transactions and specialises in customised foreign exchange packages for clients with complex needs.

Wesbank is the group's capital asset financing subsidiary and is the largest instalment credit group in the country. It finances more vehicles than any other group and offers specialised structured finance and fleet management services to corporate clients.

FNB Card Division offers Visa card facilities on its four credit cards: FirstCard, Business Card, Premier Card and PetroCard.

Just under 80% of group income is derived from the major subsidiary, First National Bank of South Africa. FNB offers a wide range of account facilities, including cheque and savings, as well as personal loans, home loans and overdrafts. All accounts can be linked to a single card. FirstNamib, the Namibian commercial banking subsidiary, contributes nearly 6% of the group's net income.

FirstNet, FNB's specialist value added network service (VANS) subsidiary, offers South African customers Europe's leading electronic data interchange (EDI) service, TradaNet, which allows companies to link their computers with those of their trading partners, vastly reducing the flow of paper-invoices, correspondence and the like-thus saving time and money.

Another of FNB's specialist operations is First Recovery, which provides computer disaster recovery facilities to major technology dependent corporations across all sectors.

First National Asset Management and Trust Company offers financial and estate planning, investment management and general trust services.

Associate companies include 50% owned First Bowring and Associates, one of the country's largest insurance brokers, FutureBank, General Accident Insurance, a short-term insurer, 29.2% owned Southern Life, the country's fourth largest life assurer, and GuardBank Management Corporation, which manages mutual funds.

FNB is pioneering several technologically-driven products which could result in a new level of banking convenience for customers. These include: smart cards, heralding the arrival of the "electronic purse" in South Africa;

* biometrics, which involves fingerprint identification, and is being used to facilitate large-scale cash payments, such as pensions, in rural areas;

* the provision of photographic images of customers' cheques on bank statements.

Technology has been used to bring first world service standards to third world regions. FNB customers in Botswana enjoy the same level of service as those in Johannesburg.

FNB is a client-driven organisation, a one-stop financial services and banking group. With its spread of financial and banking services both in South Africa and abroad, no-one is better positioned to welcome new friends to South Africa. Similarly, South Africans planning overseas trade or expansion are increasingly turning to FNB for specialist advice.