Deliver high performance in all business units

Transforming Wealth Management

We are intent on creating a single Wealth Management business that is lean, cost competitive, growing profitably, and operating on its 12-15% RoE target.

Our initial goal is to reduce Wealth Management's overall cost base by £45 million, from 2012. This will enable it to meet its part of Old Mutual's commitment to shareholders while allowing it to reinvest for profitable growth.

In 2010 the business made great progress, delivering run rate savings worth £35 million. That is 35% of the Old Mutual target and over 75% of the demanding Wealth Management target. A number of initiatives that will deliver the remaining c.£10 million are in place. Most of these are already well advanced and we hope to hit the run rate savings target earlier than our 2012 deadline.

Audits of the programme by KPMG and Group Internal Audit in 2010 have given it a green light. Even better, they have recommended rolling out its approach and processes as best practice for other Old Mutual cost efficiency programmes.

Meanwhile, the Wealth Management business has not been neglecting growth. In 2010, Skandia UK's sales reached £6 billion - taking its share of the life, pension and investment market to a record 7%¹ for the first three quarters of the year.

1 Source: Skandia sales divided by combined total of ABI (traditional) and Lipper (platform).

Measuring risk with precision

In 2009 Nedbank Business Banking launched a capital optimisation initiative focused on cleaning up risk data. To help track and monitor progress we developed our own Risk Data Accuracy Measure (RDAM). This aims to quantify risk so that it can be monitored and managed right down to the lowest level. By summarising all the elements of risk data, it allows us to track progress on our various capital optimisation initiatives.

Including RDAM on credit performance scorecards drove the desired behaviour around the input measures. All credit staff could see exactly which inputs were included in their final score. By changing the inputs and the weight they carried in the final score, we could focus employees on the areas that required closest attention.

Using performance ladders to include the RDAM in the monthly internal business communication raised awareness of the importance of risk data accuracy. This instilled a healthy competitive spirit among credit employees to achieve the number one ranking.

Since we launched the RDAM, the quality of Nedbank's Business Banking's risk data has improved significantly. We see it as one of the key contributors to our success in cutting our capital requirements by more than 20% over the last two years.