Ruth_Leas agenda

The past year has posed challenges, but Ruth Leas believes the bank is building momentum.

Following a challenging 2020, Investec Bank plc is ready to embrace a growth mindset, says chief executive, Ruth Leas, who took on the role in November 2019 after two years as chief risk officer, and more than two decades working for the Investec group. She took the helm just a few months before the world was turned upside down by the Covid-19 pandemic.

“Thinking back to this time last year, certainly the macroeconomic outlook was very bleak. It was difficult to take a reading of what sort of future was ahead of us — there were huge levels of unpredictability,” Ms Leas observes. “What’s [now] giving us the most confidence is when we look at performance and client activity, particularly in the last quarter of 2020, clients have started to become very active again. [They are] looking to borrow and to take steps forward with their businesses.”

Bouncing back

Building on the momentum seen during the later months of 2020 and early 2021 will be essential to bounce back from a difficult 12 months for Investec group, which is listed in both South Africa and the UK, its two principal centres of operations. In its March 19, 2021 pre-close trading update for the full-year ending March 31, it announced that operating profit for the group is expected to be 16–24% lower than for the full year of 2020.

On the UK side at Investec, of which Ms Leas heads up the banking subsidiary, Investec Bank, the structured products business has struggled during this period due to increased risk management costs caused by pandemic disruption. At the time of half-year results in November 2020, risk management and risk reduction costs associated with the structured products book had reduced operating profits by £53m ($74m).

Ms Leas comments that the bank will no longer be active in structured products, which it had used as a way to raise funding rather than as a profit-generating channel, and will “adapt to use its other funding channels, which are now far cheaper and cost effective in the current market”.

New opportunities

She also believes new opportunities are on the horizon for the bank to make an impact. Investec Bank has carved out something of a unique and targeted position for itself within the UK market, occupying a space between the worlds of private banking, wealth management, and corporate and investment banking.   

“We don’t see a competitor who has the same combined and diversified proposition that Investec in the UK offers,” Ms Leas says. “We can deal with our clients along the entire journey, from their personal banking requirements in terms of mortgages and transactional banking, all the way through to business lending, hedging and risk management or raising equity finance for their company.

Career history: Ruth Leas  

  • 2019 CEO, Investec Bank plc
  • 2017 Chief risk officer, Investec Bank plc
  • 2014 Head of risk management, Investec Bank plc
  • 2012 Head of investor relations, Investec Bank plc
  • 2008 Credit risk, Investec Bank plc
  • 2004 Co-head US principal finance, Investec Bank plc

“We have the balance sheet, as well as the capital, to support our clients across that whole journey.”

There is a clear growth opportunity, Ms Leas believes, in catering to this group of clients who are sometimes underserved elsewhere. “We are very focused on private clients,” she says, with the bank typically serving clients with at least £300,000 of income and minimum net asset value of £3m, with most clients at substantial multiples of these numbers. “That is a space which appears to be slightly too small for some of our larger competitors, where they may have chosen instead to go down a digital-only route for those smaller clients,” she says.

Similarly, she sees “huge opportunity in the private-company space where smaller companies are not given dedicated service and attention by the big banks”, whereas Investec views this group as entrepreneurial business builders, and is there to “create wealth with them and manage that wealth with them” over time.

Areas of focus

Private equity finance, corporate and acquisition finance and equity capital markets are all areas of focus within investment banking, and the bank has expertise at a specialist sector-level in areas such as real estate finance, power and infrastructure finance.

Efforts have been underway group-wide since 2019 as part of Investec’s simplification agenda to create more focused businesses, geared around its principal markets and in targeted areas of strength. The clearest example of this is, perhaps, the March 2020 demerger of Investec’s asset management arm, now operating separately as Ninety One.

Geographically, the bank has also made some considered choices about where to devote its resources. For instance, at the end of 2020 it announced that it was withdrawing from Australia after operating there for 23 years. “[The business] was doing well and it was profitable, but we felt that we needed to concentrate our capital in the UK, to be our principal market, so that we can dedicate ourselves to achieving scale and relevance rather than spreading ourselves too thinly across the globe,” Ms Leas says.

This time last year, it was difficult to take a reading of what sort of future was ahead of us — there were huge levels of unpredictability

Ruth Leas, Investec Bank

Although the bank maintains several other international operations, Ms Leas says these are focused businesses, which do not require Investec to divert substantial capital away from its core markets. This includes its US power and infrastructure finance and US securities business, which is an extension of its activities in the UK and its joint venture with State Bank of India (SBI), which leverages the market presence of SBI.

She also reflects that the pandemic accelerated some of the strategic changes that had been taking place. “One of the positive outcomes of Covid-19 was the ability to act decisively,” she says. “We went ahead much faster with strategic integration internally. We were set up in a very siloed fashion within the bank in the past, with support staff for our CIB [corporate and investment banking] business and our private banking business operating entirely separately, so we found ourselves with a large amount of duplication of roles.

“In the later months of last year, we moved to integrate those teams together, which has enabled us to be far more efficient and to optimise our cost-to-income ratio, putting ourselves in a far better position going forward.”

Looking forward

At the bank’s trading update in March, group chief executive Fani Titi, stated that “the simplification of the group [is] now substantially complete”. From an Investec Bank plc perspective specifically, Ms Leas too is keen to focus on the future: “As we sit today, we are ready for a growth mindset and to look forward.”

For instance, one area of the business that has enjoyed some notable success in recent months is in equity capital markets (ECM). “Since April 2020, we’ve supported our clients to raise more than £2.8bn in capital. And we ranked number one in the UK as the sole bookrunner in small and mid-cap equity raises since the start of the Covid-19 pandemic,” Ms Leas says.

Some standout transactions include a £141m capital raise for UK pub chain, JD Wetherspoon in April 2020, at the height of pandemic uncertainty, as well as a £94m placing in January 2021, with Investec acting as the sole bookrunner on both transactions.

Investec also acted as the sole sponsor and bookrunner for Cordiant Digital Infrastructure’s £370m initial public offering (IPO) in February 2021. This as the largest listed fund IPO in the UK since 2018 and the largest listed infrastructure fund IPO since 2007. Ms Leas believes that the strong pipeline of ECM transactions over the past year is testament to the team’s long-term approach of building up client relationships. “We have been generating and germinating relationships with our clients over many, many years, and a sense of trust has developed between us. And when a situation like Covid-19 has presented itself, we have been there to support our clients,” she says. “It has been relentless, but also it’s been really incredible.”

Positive environment

Despite the trials of the past year, ensuring Investec remains a positive, entrepreneurial and encouraging environment for both clients and staff is a clear priority for Ms Leas. It is something she says is fundamental to why she has worked at the bank for the past 23 years. “People are the secret to our success,” she says. “In terms of our approach to our clients, and the can-do attitude we display, and how our staff feel. Mental wellbeing has always been a focus for Investec, starting right from our founders … we’re very focused on belonging and inclusion, and that is a contributor to how we perform.”

Ms Leas also recognises the potential of her senior position to have a positive impact by demonstrating to a younger generation of women what it is possible in an industry that is dominated by men. Promoting diversity more broadly within the organisation is also an important issue for her, and a key part of the organisation’s wider culture. “We are an organisation that has a moral compass, bringing about positive change in terms of gender and race — not only in the last year, but in the past few years — and we are very focused on that,” she says.

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