South African banking group Nedcor is shouldering the pressure of the biggest banking merger in the country in a decade, but without a leader. CEO Richard Laubscher shocked the market last month when he announced he would be stepping down as CEO after 10 years at the helm, writes Stuart Theobald in Johannesburg.

Nedcor acquired smaller rival BoE last year in a $1bn transaction after a run on BoE left it with no option but a sale. Mr Laubscher (52), who has taken much criticism about Nedcor’s performance recently, was expected to stay in office until the merger was fully bedded down, but that, according to Nedcor’s integration plans, will not happen until 2005.

Nedcor also issued a profit warning to investors – the third in 18 months. Shareholders have been Mr Laubscher’s loudest detractors, with the share price of the Johannesburg-listed group falling more than 50% in the past three years. London-listed Old Mutual, the 53% parent of the bank, has suffered similar investor pressure and its dissatisfaction with Nedcor’s performance was growing. Old Mutual chief executive Jim Sutcliffe publicly criticised Nedcor’s financial disclosure a month before Mr Laubscher’s resignation, although Nedcor denies Mr Sutcliffe was instrumental in its chief’s departure.

Nedcor chairman Chris Liebenberg said Mr Laubscher had indicated his intention to leave on numerous occasions in the past few years. There is no obvious successor but Mr Liebenberg said a board committee had produced a list of candidates. He said he hoped to make an announcement by the end of this month. Mr Laubscher would stay with the bank until the end of the year to help with the transition, he said.

Nedcor is in serious need of some level-headed leadership. The profit warning was necessary because the bank’s interest margins have been squeezed. Its funding book is the most long-dated of South Africa’s big banks and the interest cycle is on rapidly downward curve.

During his tenure, Mr Laubscher turned Nedcor into the most efficient bank in the market, positioning it to launch a hostile bid for larger rival Standard Bank in 1999. Regulators blocked the move and the disappointment marked the end of shareholders’ love affair with Mr Laubscher. Ironically, since then Standard Bank has moved ahead in market ratings and market share, while Nedcor has been sliding.

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