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Enterprise Governance and Compliance
Enterprise Governance and Compliance is responsible for the monitoring of regulatory and reputational risk and the setting of related policies. It also manages the Enterprise-wide Governance and Compliance Frameworks. Nedbank Group's governance strategy, objectives and structures have been designed to ensure that the group complies with legislation and a myriad of codes, while at the same time moving beyond conformance to governance performance.Nedbank Group has adopted an enterprise governance framework that covers both the corporate governance and business governance aspects of an organisation. It encompasses governance structures that are strategically linked with performance management, enabling companies to focus on the key areas that drive their business.
Enterprise governance and compliance constitute part of the entire accountability framework of the organisation, and require a balance between accountability and assurance (conformance) and value creation and resource utilisation (performance).
Conformance includes corporate governance and covers issues such as board structures and roles, and executive remuneration. Performance includes business governance and focuses on strategy and value creation, enabling the board to:
- make strategic decisions;
- understand its appetite for risk and the key drivers of performance; and
- identify key principles of decisionmaking.
In tandem with management of governance issues, the compliance function ensures compliance not only with regulatory laws and standards, but also with internal policies and procedures.
The Chief Governance and Compliance Officer, Selby Baqwa SC, is a member of the Group Executive Committee (Group Exco), reports directly to the Chief Executive and attends the board and board committee meetings by invitation. He also has direct access to the Chairman of the Nedbank Group and Nedbank Boards.
A strong network of divisional governance and compliance officers works closely with the central Enterprise Governance and Compliance Division in training, project implementation and monitoring, as well as the creation of an appropriate governance and compliance culture.
Risk and Capital Management
Significant investment has positioned Nedbank Group at the leading edge of risk management. This, coupled with the sophisticated management science and capabilities derived from Basel II, is being used to optimise the risk/return and growth of our business, consistent with the risk appetite of the group.Focus areas for the year ahead include the following:
- Deriving full value from the implementation of Basel II on 1 January 2008.
- Ensuring that Basel II is used as a risk enabler and facilitates active credit management in the more challenging credit cycle.
- Capitalising on the forensic capability already achieved through highly successful practices in South Africa by rolling out similar practices in the group's African operations.
- Finalising the group's disaster recovery plans to ensure sound business resumption and continuity.
Group Strategy and Corporate Affairs
The Group Strategy and Corporate Affairs cluster plays a major role in managing the group's image and reputation. Key functions include marketing, communications and group strategy. The cluster is also responsible for the Nedbank Foundation and the Nedbank Economic Unit as well as for the delivery of the group's objectives in terms of the Financial Sector Charter and the dti Codes of Good Practice.The strategy implemented in 2004 was to reposition Nedbank as a bank that is accessible and desirable to all South Africans by broadening its presence, profile and appeal. The repositioning supported Nedbank's 'Deep Green' aspirations of being a truly 'Proudly South African' brand, a great place to bank and a bank with true community orientation. To achieve this, awareness levels of the brand across all segments, especially in the mass market, needed to be raised significantly. Nedbank's intention was to retain its profile as the most aspirational bank of the peer group in the eyes of the consumer. The Nedbank brand was positioned as a bank with a deep understanding of clients and their banking needs as well as a sincere commitment to becoming more relevant to more people. Our message is that Nedbank provides 'deeper understanding' by being a 'smart' and 'caring' bank. In essence, a bank with a good head and a good heart that helps its clients realise their aspirations. Prior to the current increasing awareness of environmental issues, the Nedbank brand was positioned as the 'green' bank - the bank that cares for the environment (community-based conservation). Simultaneously, the brand needed to remain relevant, familiar and reassuring to its historical client base and brand franchise.
Nedbank's sponsorship strategy and properties were also comprehensively reviewed. Nedbank's flagship sponsorship of golf was extended to include further initiatives for women and golf development. The biggest ever sponsorship of road running (the Nedbank City Marathon and Matha Series) was introduced in conjunction with Athletics South Africa. The announcement of the Nedbank Cup sponsorship in the Premier Soccer League marks the culmination of a long search by Nedbank for an appropriate and significant opportunity to support the soccer fraternity, and extends the brand-building and marketing programmes that have been so successful for us in road running, golf and sport for people with disabilities. The Nedbank Cup demonstrates our bank's passionate commitment to national pride and community development by supporting and enabling the sport with the greatest number of participants and supporters in South Africa.
Group Technology
Review of the year
Group Technology is Nedbank's centralised technology unit with responsibility for all components of the group's technology processing, development and systems support. The functions that operate all of the group's IT systems, databases, technology infrastructure, software development and IT projects/programme management are centrally managed to provide economies of scale and facilitate a cohesive groupwide service-oriented architecture technology strategy.The strong performance by Nedbank's business clusters during 2007 boosted the group's client base, expanded its distribution network and resulted in improved product offerings and client service. This increased the scale and complexity of the group's IT operations and by the end of 2007 Group Technology supported and serviced:
- 353 different systems, while processing between 90 million and 130 million transactions daily;
- 30 000 batch programmes and 1 500 online programmes that run daily;
- 4,9 million accounts that generate 28,4 million client statements per annum; and
- in excess of 26 000 PCs, 2 677 servers and 14 000 printers across the bank.
Group Technology reduced outages and severe disruptions to the business, despite a 23% increase in the rate of hardware, software and application change. Benchmarking conducted during the year continued to reflect Group Technology as a cost-effective service provider compared with local and international companies.
The market has experienced an increase in losses as a result of internet fraud through phishing attacks. Group Technology has ensured a minimal impact on Nedbank.
An IT architectural vision for Nedbank's future was articulated in the early 2000s and the bank approved a strategy in 2006 to implement this vision using service-oriented architecture (SOA) methods and best-of-breed applications. During 2007 the following progress was made towards realising the group's IT architectural vision:
- The first phase of common and reusable services was developed and deployed.
- The self-service channels were comprehensively refreshed, providing a single framework that will enhance delivery across all self-service channels.
- An upgrade of the client information system is welladvanced and will be largely concluded in 2008 to allow for an enhanced view of client information.
- The strategy and technology choice for the replacement of staff-assisted channels was ratified.
The synergy project for the outsourcing of all data and voice networks announced in conjunction with Old Mutual (South Africa) in 2005 planned to deliver savings of R1 billion over a five-year period. The project continues to deliver savings benefits above expectations and an additional saving of R25 million was realised in 2007.
Further synergy savings for 2007 were achieved for Nedbank and Mutual & Federal by insourcing printing and mailing services, as well as realising purchasing volume discounts.
As with all businesses within South Africa, the group's exposure to electricity supply constraints, particularly in Gauteng, is a matter of concern. However, Nedbank has adequate power generation capacity at its main campus sites as well as at key installations, such as data centres. We are engaging with landlords with regard to the upgrading of power generation at certain leased premises and plan to have backup power in sufficient branches and ATMs to minimise client inconvenience during periods of load shedding.
Internationally Group Technology created more certainty around Nedbank's income stream and significantly improved the bank's relationship with Swisscard by signing a revised application service provider (ASP) Swisscard contract with Credit Suisse. Consequently, during the 2007 financial year this strategic partnership reflected a profitable outcome against a budgeted loss.
A client satisfaction survey was conducted with over 5 000 employees in Nedbank and 47 clients in Swisscard, achieving a most acceptable median score of 67,9%. Nedbank and Swisscard have committed themselves jointly to develop management actions for 2008 to ensure improved client satisfaction.
Prospects
Group Technology will continue on its path to build Nedbank's future application landscape, which was developed and base lined during 2007. This landscape outlines the overarching view to guide the three-year technology and business-aligned roadmaps and will assist Group Technology in its continuous quest to provide flexible and affordable information technology that evolves quickly and easily to suit the most demanding requirements of Nedbank Group's business clusters.Group Human Resources and Employment Equity
Review of the year
In keeping with our belief that ‘great things begin with great people’, 2008 was a year in which we continued the strong focus on our people, their development and retention, the culture and climate in which they operate, and alleviating the challenges facing them as employees in a global economy.Nedbank is faced with challenges in the war for talent and the shortage of key skills in the financial sector, hence our efforts in attracting and retaining great people are supported by a creative employee value proposition (EVP), as well as simple and effective tools to enable high performance. These tools include having job profiles, outlining a clear purpose and objectives, job matching to the market for marketaligned remuneration and benefits, a career management system that enables employees to make their own career decisions, a learning and growth framework that caters for all levels of development from entry-level matriculants and graduates to senior managers and executives, as well as flexible work practices to enable more productive working hours that suit employees and the organisation.
We are committed to attracting the very best people to work at Nedbank – our EVP and our recruitment processes support our efforts in this regard. In 2008 altogether 20 campuses were visited during the successful external graduate recruitment campaign, with contact being made with approximately 8 500 potential candidates. There were also 22 654 potential candidates registered on our e-recruitment system in response to 628 advertised positions; and approximately 6 500 referrals by staff were registered on our e-referral system. Our staff are encouraged to refer potential candidates to Nedbank and are rewarded for successful placements after a successful referred candidate has been in the specific position for six months.
We believe that the opportunity for development is key to attracting and retaining the right people at Nedbank, and this forms a significant part of our value proposition to current and future employees. At the entry level the drive to develop learners for the financial services industry resulted in 160 learners participating in the Kuyasa and Letsema Learnership Programmes, 110 on other learnerships, 23 graduates on the Training Outside of Public Practice (TOPP) Programme for accountants, and 68 graduates on the Nedbank Graduate Development Programme. All learners and graduates undergo intensive on-the-job training and, following successful completion of the programme, are ready to be placed.We have been very successful in placing the majority of students on completion of the programmes and have been pleased by their progress.
The External Bursary Programme was launched in February and 464 bursaries were awarded to undergraduate students studying toward bank-related qualifications. Furthermore, internal bursaries were awarded to 949 employees for further academic study at graduate and post-graduate level and study grant assistance was provided to 305 employees for the education of their children.
The Management Development Programme (MDP) is aimed at establishing a common values-based management approach within our organisation and the Old Mutual Group. To this end 9 897 (10 867 including Africa) of our staff have attended the role orientation workshops this year and are now embarking on practical application of skills learnt on these workshops. Business and academic development for successive levels of our management are catered for in the Applied Academic Programmes. In 2008 altogether 27 senior managers attended the executive education programmes, locally and internationally, and 446 managers attended business education programmes at the top business schools in South Africa.
Nedbank recognises that the single differentiating factor for competitive advantage is the prevailing culture of our organisation. In ensuring that we receive continuous feedback for improvement, Nedbank measures the staff morale through different diagnostic methods. The current organisational culture as perceived by employees is measured by the Barrett Survey, focusing on the level of entropy and the gap between the current and desired culture. For 2008 the entropy levels improved to 14% from 17% in 2007. This improvement comes off the original base of 25% in 2005 and shows a marked improvement over the past four years. International research shows that an entropy score of between 11% and 20% indicates a well-functioning organisation and organisations operating at levels of 10% and below are considered exceptional. The number of matches between the current and desired cultures increased from four to five, which is one below the best-practice range of six to eight matches. The Nedbank Staff Survey measures employees’ perceptions of organisational performance on 12 dimensions, and there was a statistically significant improvement in the score of 71,5% in 2007 to 75,1% in 2008, comfortably above the best-practice range of 60% to 70%.
The impact of working in a highly competitive financial services industry can be detrimental to the health and wellbeing of employees. Nedbank is cognisant of this and provides free wellbeing services to employees, in the form of psychological counselling for personal problems, trauma debriefing, executive health examinations, and financial assistance to qualifying employees experiencing exorbitant medical expenses.We also aim to provide an environment in which a balanced work and home life is achieved through flexible work practices.
Nedbank’s response to the devastating impact of HIV/Aids on employees is acknowledged through a two-pronged strategy. Firstly, prevention is approached through the voluntary testing of employees and, secondly, we attempt to improve the quality of life of employees affected by the disease. In 2008 a total of 5 959 employees underwent voluntary testing to confirm their status, equivalent to 24,25% of employees, way beyond our expectations of 10%.
We are buoyed by the significant successes achieved in 2008, and we strive to continue building on our capability to deliver high performance, retain and develop our best people, create a competitive advantage for the bank through our unique culture and contribute to Making Things Happen.
EMPLOYMENT EQUITY
Nedbank aspires to be a leader in transformation and a great place to work. Transformation is gaining increasing momentum in Nedbank and, in particular, employment equity (EE) has been one of the key focus areas to accelerate transformation.While demographic representation is a requirement of the EE Act, the group firmly believes transformation is not only about compliance with legislation and achieving targets – it is also about creating an environment for staff that is conducive for meaningful and sustainable transformation to take place, which will enable the organisation to flourish.
If demographic representation is achieved in a supportive environment, then the bank will be well-positioned to maximise the benefits of a diverse workforce. This will ensure that the bank not only performs, but also remains relevant in the South African context.
EMPLOYMENT EQUITY PLAN 2008 TO 2010
An EE plan was submitted to the Department of Labour (DoL) in April 2008, and the group was complimented on the quality of the plan, which was compliant with all aspects of the EE Act. All business clusters have also finalised EE plans, which are aligned to the Group EE Plan. The balance of this year has been dedicated to implementing quantitative and qualitative aspects of these plans, which are monitored as part of the performance agreements of cluster heads and all the management levels below.NEDBANK EMPLOYMENT EQUITY FORUMS
Nedbank has created governance processes and structures such as the Nedbank Employment Equity Forum (NEEF) and has established employment equity forums (EEFs) at cluster, divisional and regional levels. The Nedbank Employment Equity Forum (NEEF), which comprises the chairpersons of the cluster EE forums, EE managers, the People with Disabilities (PWD) Forum chairpersons,Women’s Forum representatives, trade union representatives and other stakeholders, monitors EE and consults with staff across the group.Under the leadership of Nombulelo Moholi, Group Executive: Strategy and Corporate Affairs, the NEEF continued to champion EE in the bank.
The NEEF was also consulted on the Workplace Skills Plan (WSP), which was submitted to the BANKSETA at the end of June 2008. By being involved in these two major submissions, the NEEF ensured that there was greater alignment between the EE plan and the WSP, and that the Skills Development Plan supported EE. The NEEF also serves as a platform for clusters to showcase their innovative initiatives to support EE, and through this medium also monitors clusters’ progress against the implementation of their respective EE plans.
Other governance structures to facilitate effective implementation of transformation at Nedbank include the Group Operations Committee (Opcom), the Transformation and HR Committee (TRAHRCO), EE Managers Forum, PWD Forum,Women’s Forum and EE Implementation and Communications Steering Committee, all of which have contributed to the successful implementation of our plans.
Click here to read the full Risk and Capital Management report in the 2008 Nedbank Group Annual Report.
| This page was updated on 25 June, 2009 |  Return to top |
