NASTASSIA ARENDSE:  Today I am joined by Nedbank CEO in our Wednesday Conversation. Mike, thanks so much for your time today.

If you had to walk into a room and the CEO of Goldman Sachs, Lloyd Blankfein, is in there, and he’s heard of Mike Brown, he knows you work at Nedbank, and he asks you to describe yourself using five words, what would it be?

MIKE BROWN:  If I had to describe myself using only five words, I’d certainly start off by saying hello to Lloyd. I’ve met him at the World Economic Forum in Davos, I’ve met him at the International Monetary Fund. Clearly, I’d remind him that I’m the chief executive of a South African bank. That I run a business that is one of the big four South African banks would be the second descriptor. I’d remind him that our business has aspirations to grow into Africa and that that’s an enormous opportunity for us. I would remind him that I’ve been in this role for about seven years. And then I think finally I would talk about the business that Nedbank and Goldman Sachs have done together, because we’ve had a longstanding relationship between our organisations.

NASTASSIA ARENDSE:  You’ve been in the role for seven years. How long have you been in banking as a whole?

MIKE BROWN:  I’ve been in banking a very long time. I actually started out in banking when I was still an articled clerk at Deloitte, and I was – rather fortunately at that stage, I think – placed into a group that audited banks. It wasn’t yet the time in auditing when there were entirely specialist groups, so we audited banks among other companies. That would have been 1988. It was at that stage that I realised that, among the companies that I was auditing and trying to understand how they worked, banking was by far the most complex and interesting. So, I’ve been involved in banks since 1988. For the first couple of years it was in the capacity of an auditor and then in 1993 I joined a very small bank in Durban called Natal Building Society, or NBS, which had just listed on the stock exchange.

I remained employed by exactly the same employer, because NBS was merged into Boland Bank which at some stage was bought by Bank of England – and then all of that was bought by Nedbank.

NASTASSIA ARENDSE:  You come from a family of bankers, if I understand it correctly. Your dad was a banker, granddad was a banker. How did you get into banking? Did you always know that it would be the career that you had in mind, or did you have other options that you were interested in?

MIKE BROWN:  I definitely didn’t know that that was always what I wanted to do. My father in actual fact didn’t want to be a banker. He had always wanted to be a doctor, but his parents didn’t have enough money to send him to university so he ended up starting work in a bank.

So, for me, with my upbringing, at some stage I wanted to either be a doctor, a lawyer or an accountant. Those were the three things that I was thinking about. I navigated more towards the side of commerce, and ended up studying to be a charted accountant. And effectively, as I said earlier, it was really in my role as becoming a chartered accountant and in that articled-clerk process that I became exposed to banks and banking as a career option, other than clearly through my dad. But in those days, I don’t think you really got much advice from your parents as to what you should do.

NASTASSIA ARENDSE:  Speaking of those days, how would you describe your childhood and upbringing?

MIKE BROWN:  I think I had an enormously privileged childhood. My mother and father met here in South Africa and then very shortly thereafter my father was transferred to Zimbabwe. I was born there and went to junior school there. We had I think some very strong Christian values based education and upbringing. And then when my father retired from the bank he moved back to South Africa again. I continued my schooling and university in Pietermaritzburg. So, I certainly look back very fondly on my childhood and the values that were ingrained in me that have stood me in great stead my whole life.

NASTASSIA ARENDSE:  You went to Maritzburg College and the great thing about going to an all-boys school, or an all-girls, is that there are some life lessons that one picks up when you are, I suppose, away from your parents and you are hanging out with people who are your age and in the same class, and you are learning together. What kind of life lessons or principles did you pick up from there?

MIKE BROWN:  I think the life lesson I learnt pretty quickly moving to Maritzburg College is the importance of hard work in life, and that there are no free lunches. I’d come from a very small school in Zimbabwe – I think there were 20 kids in my class in total. If you then move to a boys’ school of 200, you realise that if you want to be good at something or if you want to get to the top of anything in life, it is not an easy journey. So, for me Maritzburg College was about again continuing to learn about values, but also importantly learning about competition and the importance of an unbelievable amount of hard work if you want to get to the top of anything.

NASTASSIA ARENDSE:  Before we get to the part where we discuss your drive to succeed and how you take risks, whether from a business perspective or personal, what were the early days of your career like in banking?

MIKE BROWN:  I think for me banking has always been an enormously large canvas of learning. My first job in banking was something they called “manager special projects” and looking back I know that special projects is a kind of job where they think you may be of some use to the organisation, but they don’t really have a job for you. So, you get a desk and a chair, and then they figure out what you should do in that environment.

But I was very fortunate to start out in a relatively small organisation, the NBS that I spoke about earlier. That gave you access to understand an organisation in its entirety. I worked in special projects, which actually transformed into structured finance and private equity. I worked in the treasury environment, I worked in the corporate banking environment and I worked in the commercial property environment. So that gave me I think an enormously good grounding. I had some wonderful teachers early on in my career as to how banks work and what I should do in a banking environment.

And then I was enabled in that small environment to get exposure to senior management and leadership roles at a very early age. So, I started running banking divisions of pretty reasonable sizes in my early thirties, which I think gave me an enormous amount of experience.

NASTASSIA ARENDSE:  When it comes to how you view success, are you competitive in how you deal with things or how you make decisions? How do you deal with that?

NASTASSIA ARENDSE:  Very definitely my definition of success at a personal level is all around balance. And I think to be successful as a human being you need to be successful in your career, successful in your home life, successful in your social life and successful in your spiritual life. I don’t think you can neglect any one of those to have a rounded success as an outcome. I think, that said, people who know me will know that I’ve always been competitive, whether it’s on the sports field or a game of darts or whatever it is. So, I think I very definitely am competitive by nature.

NASTASSIA ARENDSE:  And when it comes to taking risk? Every bank has a chief risk officer, somebody who is going to say, “I don’t think we should be doing that,” or perhaps the CFO comes in and says, “I don’t think this is a viable investment”. How do you manage risk, especially when you are operating in an industry, a sector that’s competitive?

MIKE BROWN:  I think it’s not just the job of the CFO or the CRO. In a bank, everybody’s job is effectively about risk. The job of banking is taking on risk; that’s what banks do. So, I think about risk in the sense that it’s really our job to be able to measure and understand risk. As a consequence of being able to measure and understand risk, you can price it and manage it. So inherent in running a bank is running a risk-management franchise, and that’s the joint job of the entire management team and in fact everybody in the bank.

NASTASSIA ARENDSE:  I’m going to throw you off here, because I drive past Nedbank probably every other day, or any of the other big corporates that are around you, and one time I left very early for gym, and on my way there comes Adrian Gore at 06:30 in the morning, heading to the office. How would you describe a typical day for you from start to end, because I’m curious how people like yourself run these big companies, especially under such scrutiny at the end of the financial year when we want to see what you have been doing. Describe a typical day as a banker.

MIKE BROWN:  Well I’m sure if you’d looked at that traffic light that you stopped at, I’d have probably been in the car next door to you, because a typical day for me is that I leave home at 05:50 in the morning. I generally get into the office somewhere between 06:20 and 06:30 every morning. For me some of my most productive time in the office is between 06:30 and 08:00. I use a lot of that time to catch up on reading and news.

I’ll start by making sure I understand what happened in the financial markets the night before. I’ll use that opportunity to read both domestic and international newspapers, and then really just stand back and think through my day ahead, more from a strategic point of view, to make sure that I’ve got everything thought through around the key issues that need to be dealt with in each of the meetings or interactions for the day ahead.

Then in many of these roles a large part of your day is spent in a number of meetings. Those are both internal and external meetings. Internal – you can think of board meetings, board sub-committee meetings, exco meetings or leadership groups around projects in the organisation. Then at an external level there would be external stakeholders, as in shareholders, fund managers, Reserve Bank regulators, or other external parties, and then customers. So, there is just a very, very full day.

And then generally I would continue in the office until probably about 18:30 in the evening – so it’s 06:30am to 18:30 in the office. I go home and then almost every night I will have an hour or two of preparation for the next day. Then we start again.

NASTASSIA ARENDSE:  Wow, that’s absolutely busy. A lot has probably happened in the banking industry since you started in the ’80s – a lot of good, a lot of bad. When you look at the banking industry in South Africa and its landscape, how has it changed for you?

MIKE BROWN: Certainly, I think all of us should be remarkably proud of the banking industry that we have in South Africa. I don’t just say that because it’s the sector that I happen to work in. We really do have a world-class banking industry in South Africa. And if I look at how we’ve developed over time, clearly today it is significantly more complicated, interrelated with banks and banking systems around the globe. There has been much more development and growth of South African banks out of South Africa into the rest of Africa. We have had a dramatic change in the regulatory environment today. Compared to when I started out in banking it is almost unrecognisable.

I think the other thing that is incredibly exciting for banks today is the growth of digital and the use of digital and data as the foundations of particularly retail banks going forward.

NASTASSIA ARENDSE:  One of the things I imagine you come across between the hours where you are taking information in and catching up on the night before and news, and you are interacting in various meetings, is that phrase where you talk about “transformation in the banking industry”. How would you describe the transformation in Nedbank Group since you’ve been there?

MIKE BROWN:  I think from our point of view we are pleased with the level of transformation that we’ve able to achieve at the Nedbank Group. But at the same time, we are certainly not complacent and we recognise that there is significantly more work to be done. As many of you may have seen in the recent parliamentary hearings, we effectively presented Nedbank’s transformation story, which is at its essence that, in a transforming society any business – and here I am talking particularly about Nedbank – has to transform to remain relevant to that transforming society. We’ve spent a lot of time and energy on effectively integrating our transformation strategy into the strategy of the bank, so it isn’t something separate to what Nedbank does.

For Nedbank to be relevant in the society within which we operate our organisation strategically has to transform to enable us to deliver that. So, we’ve spent a lot of time on the bank’s strategy. And then as a consequence what does that mean, for example, for how we think about employment equity, how we think about training, how we think about the products that we serve our customer base with, what we’ve done from a small and medium enterprise point of view, how we think about our procurement strategy? So, we have a very integrated transformation journey that we are on.

NASTASSIA ARENDSE:  In your opinion, would you say that the view of bankers has changed since the low-ebb view of them in the financial crisis, when the bankers were seen as bad people who take money and do all sorts of things? Are we starting to have a more gentle, friendlier approach to how we see bankers?

MIKE BROWN:  Again, these things depend a lot on what level you look at. I do think we were fortunate in South Africa. All of our banks got through the global financial crisis in good shape. No bank in South Africa made a loss in the global financial crisis, nobody was required to raise capital, no depositors lost their money. And, indicative of that I think, has been much more conservative culture in the way that banks have been managed and run in South Africa over a long period of time.

Globally we saw in the run-up to the financial crisis really inappropriate culture and risk-taking that was rudely exposed by the financial crisis. We didn’t get to that level. So, I do hope that the vitriol against bankers globally has some balance in it. South Africa, Canada, Australia – they are big markets in the world – banks managed themselves well through that environment.

I think, that said, there was a lot of rightly directed criticism of bankers’ conduct and what that caused to the global economy in 2009 and 2010. We are now seven or eight years after that, we are in a significantly different regulatory universe, and actually most of those big banks around the world aren’t run by the same management teams that were around at those times. Most of those management teams have either resigned or been moved on. So, I think people are starting to stand back and say that the banks are really necessary in economies. If economies want to grow they require banks to be the disintermediation or the intermediation between savers and depositors. They require the plumbing systems to enable transactions to take place. So properly run and managed banks with the right ethical conduct and banks with the right culture are enablers of inclusive growth.

NASTASSIA ARENDSE:  Banking has changed. There are so many things happening within the banking industry, especially tech-wise. But there is also this thing called Bitcoin that everybody is talking about, and cryptocurrencies. What’s your view on those?

MIKE BROWN:  Our view at the moment would be that the underlying technology on which things like Bitcoin are created, which is the blockchain, has enormous use in many banking applications. Right now, there are at least two or three areas in the bank where we are piloting the use of blockchain technology as a much more efficient way of processing transactions and enabling us to run the bank.

I’m a little more sceptical, however, about the use of cryptocurrencies per se, particularly the likes of Bitcoin, just given the very chequered nature they’ve had or the types of people. Again, I’m being very general here. There are obviously some very good people who use Bitcoin. Bitcoin does currently have a reputation of being the currency of choice of people we don’t want in our banking system.

NASTASSIA ARENDSE:  When you are sitting in the office late, and you are packing up and getting ready to leave for the rest of the day, there is so much that’s happening in banking in any industry, especially in this low-growth economy. What worries you, what are you concerned about?

MIKE BROWN:  I think a bank, more than any other entity – the way that it operates and performs – is closely, closely related to the macroeconomic environment in which it operates, given its nature and how many touchpoints the bank has to the economy. So, I still worry a lot about the South African economy, the ability for us to grow our economy. And in particular in the current environment there is a lot of political noise. We are fortunate to have a vibrant democracy.

Between now and December there is going to be, I believe, be so much political noise and turmoil that people are unlikely to get to the proper job of what are those structural reforms that are required in our economy to grow the economy and create jobs. So, my biggest worry in South Africa is economic growth and job creation – like many, many South Africans. I worry a lot about our educational system and lack of ability of our current educational system to create people leaving school who are employable for the modern world. So, I worry a lot about that from an economic point of view.

NASTASSIA ARENDSE:  The one thing we are seeing in South Africa is where corporate South Africa is a lot more vocal in the social and political dialogue. We are seeing the same thing in the US. Have you seen anything like it in your career – if you had to look back from the moment you started your first job – where so many people have an opinion and they want change?

MIKE BROWN:  No. I think that corporate South Africa today is the most engaged I have seen corporate South Africa in the affairs of SA Inc, which is absolutely fantastic. We’ve got a very, very strongly led business leadership in South Africa now which is very vocal about what they believe is right for economic growth and job creation in South Africa. I’ve spent a lot of time as one of the members of the CEO Initiative, and there we’ve worked together well. We’ve had some setbacks in the ratings environment, but we’ve worked together well in areas like creating the SME Fund to help the growth of small businesses, and in so doing create jobs.

And hopefully by the time we get to early next year the Youth Employment Scheme will be up and running. I think what we’ve got is businessmen in SA being properly engaged and knowing that it’s very difficult to run a successful business in an unsuccessful society. So, it’s our job as leaders in South Africa to use that leadership platform that we have to do everything that we can to create the most successful South Africa that we can.

NASTASSIA ARENDSE:  Here’s another question that might throw you off a little. When you are alone with your thoughts, and you are taking stock of your life and everything you’ve done, what are you most proud of?

MIKE BROWN:  I am definitely most proud of my family and my children. And then if I look back from a career point of view, clearly when I started out I didn’t think that I would become the chief executive of a fantastic organisation like Nedbank and have that privilege. So, I’m proud of the perseverance over time that has enabled me to take on this role. And then I certainly try to make sure that I remain humble, because jobs like this are an enormous privilege. You know when you get them it’s part luck and part hard work. So hopefully I have remained very grounded and I’m proud of that.

NASTASSIA ARENDSE:  Say in the next 20, 25 years, when another CEO may be at the helm of Nedbank at the time, or any other institution that you have the privilege of taking over, what would you want the legacy of Mike Brown to be?

MIKE BROWN:  I think the legacy of Mike Brown in Nedbank, or the legacy of any chief executive in a business, should be to leave behind a business that is in significantly better health. When I think of the health of the business I think about that broadly. Health in terms of how it’s looked after its staff, health in terms of how it’s looked after its customers, health in terms of how much it has balanced the investment that’s required for the long term with the delivery of profits in the short term. So, the overall health of the organisation. If I can leave behind a Nedbank that is significantly healthier than the one that I was fortunate to inherit, that’s the only legacy I’d like to leave behind.

NASTASSIA ARENDSE:  Before I let you go, if you had one piece of advice for any young person out there who is a banker, who is studying banking, perhaps, and who also like me drives past the Nedbank Group offices in Sandton and dreams of sitting at that boardroom table, at the head of that table and making a decision, what would that piece of advice be?

MIKE BROWN:  First of all I would say that you really do have a wonderful dream, because a career in banking with that enormous canvas upon which you can grow as a human being is just a fantastic place to be. So, I’ll give you more than one piece of advice.

Firstly, you are definitely pointing in the right direction. Secondly, to get to that boardroom table you need to know that it is going to be a combination of hard work, get into the office earlier than everybody else, try and work harder than everybody else, make sure that you are more prepared than anybody else for any meeting. But actually, it’s not just about the work and the intellectual side. You need to balance that with people skills and EQ skills. And to get to the top you need to have the appropriate mix of IQ and EQ.

NASTASSIA ARENDSE:  Thank you so much for your time, Mike Brown

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