CORPORATE BANKING | 09 MARCH 2021 Leadership: Playing offensive or defensive Absa | Corporate and Investment Banking > Insights and Events > Leadership: Playing offensive or defensive SHARE Absa Group's Managing Director Transactional Banking African Regional Operations Thabo Makoko has a clear message to stakeholders. Both the private and public sector have come under an enormous amount of scrutiny over the last 12 months as the world has battled with the COVID-19 pandemic. In many cases, it has been a no-win situation for leaders who are having to learn as they go along but as we navigate the second wave of this crisis, it is important for us to review what we have learnt over the last year. As the pandemic has unfolded, the populist view has been to take a side: You’re either saving the economy or you’re saving lives. On one hand people argue that the “lockdown” approach was the only way to save lives by capacitating the healthcare system and slowing the spread of the virus. On the other side people were arguing that without a means to keep the economy going, the population would struggle to feed themselves and the cost of rebuilding was too high. At Absa, we knew the answer was somewhere in between and the question we kept coming back to was simple: “How do you make a meaningful contribution to the country and the economy?” The leadership team used this question to guide them through the first wave of the crisis and it was encouraging to be recognized at the Euromoney awards as one of the standouts on the African continent. Instead of picking one side of the debate, our leadership team recognized that the answer was far more nuanced and our strategy was to blend offense and defense into our client interactions. Defensively we had to Identify the key sectors that were going to remain open and decide how we were going to assess them for risk. The sectors we focused on included healthcare, food supply, agriculture and Personal Protective Equipment (PPE) and we developed strategies around how we can best service these sectors. Internally we had a lot of discussions around focusing on how we can be responsive to clients in these sectors and how we could best use our balance sheet to get resources to where they were needed. This meant a lot of interrogation of our own credit models – it was no longer a ‘business as usual’ approach – but we also had to understand the steps that the government was taking with its proposed Guarantee scheme and how this fitted in with our risk models. One of the areas where we believed we excelled during the crisis was our focus on really understanding how our clients ran their businesses and what were the key levers that would impact their survival. There is often a view that your banking partner is somebody who is very detached from how your business runs and the sectors they operate in and is really there just to serve an administrative function. The reality is that we have to make a concerted effort to study and understand what is happening across a variety of sectors so we can put in place the right solutions for a wide array of clients. We understood when we spoke to our manufacturing clients, the challenges they faced when they couldn’t get their goods into supply chains and turn produced goods into cash. Similarly we understood that export-focused businesses would face their own liquidity challenges and by understanding their people and their business processes, we could develop meaningful solutions to their key requirements. The flip side of this is that we also understood that we couldn’t waste opportunities presented owing to the crisis and by understanding what was happening in the global economy, we could also identify sectors that were likely to thrive and this was the opportunity to put our offensive hat on and help clients expand. By being able to access both real-time industry data and tap into a network of sector experts, we were able to track trends in the retail sector that gave us the confidence to be able to support clients that have made a shift to e-commerce. Analysis of consumer and business spending patterns meant that we could see the spike in people investing in home improvements, wi-fi routers and solar infrastructure and could work out how to support our clients that work in these sectors. Looking forward, we can see certain sectors developing including some exciting developments in the world of healthcare, sports tourism (hiking and outdoor activities) and the development of local suppliers. By having access to data, we can see these trends emerging and help our clients to navigate what is happening in their respective industries. As a bank one of the areas we pride ourselves on is introspection and working out what we did right and wrong and how to tailor our responses to the evolving pandemic. Winning the Euromoney awards was recognition of our leadership structures and one of the areas we believe we excelled in was that we helped our clients focus on liquidity. The old adage is that a banker will only offer you an umbrella when it is not raining but if we look at how our clients negotiated 2020, we think we added enormous value in what we did. Our clients played open cards with us because they saw us as an informed partner rather than simply a bank. Our message to stakeholders remains clear: Don’t panic. Focus on your staff, your customers and your key stakeholders – we can see organisations shifting out of defensive mindsets and those that are positioned for growth have the potential to have a great 2021. https://cib.absa.africa/wp-content/uploads/2020/07/file_example_MP3_700KB.mp3 Related Articles RISK MANAGEMENT Banking on FX Efficiency Corporate treasurers are increasingly in the spotlight as businesses aim to negotiate these difficult times. How can banks help? RISK MANAGEMENT Where Next for Credit Markets? After a volatile 2020, what is the current state of South Africa’s listed credit markets – and what opportunities exist for issuers and investors? RISK MANAGEMENT FX in a Post-COVID World Digital transformations and new market dynamics Businesses are changing their foreign exchange (FX) hedging strategies in response to the post-pandemic world. What does that mean for banks and their FX sales teams? 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