Group Chief Executive & Group Finance Director Q&A

With the announcement of your new priorities and structure, what's really different?

What's changed most significantly is the formation of a new international division focusing on long-term savings business as our central capability. Of course asset management is very important to us and the new organisational structure makes this clear.

We are also measuring success in terms of profit rather than size.

Previously, we had structured around regions and countries, effectively isolating similar businesses in different countries from each other. Now, in identifying and creating the long-term savings structure, we have grouped these homogeneous businesses into a single division under a single head. We believe that this will allow us to leverage and share the capabilities, marketing know-how and people across geographic boundaries and minimise duplication.

The operating model has also been revised. To date, the businesses have operated in a federal, decentralised basis, with the centre playing a relatively light role in governance, risk and human resources. That will no longer be the case. Our newly constituted Group Executive Committee reflects these changes and has the skills and experience to achieve the levels of control required to make this model work.

Finally, we are moving to an increasingly streamlined group and will execute on this as and when the market becomes more benign and transactions become economically viable.

With the focus on longterm savings, how does Nedbank fit into the Group's plans?

The particular shape and history of Old Mutual in our heartland, South Africa, makes Nedbank an extremely important element of our comprehensive financial services offering there.

Not only are the financial needs of both Old Mutual and Nedbank's customers comprehensively covered through the products and services of both companies, but the potential for each company to sell to each other's customer base is enormous.

In addition, real annual savings realised through synergies between Mutual and Federal, Nedbank and Old Mutual (South Africa) account for over R1bn. The untapped potential for even further synergies is a prize worth fighting for. Tom Boardman sits on the Old Mutual Group Executive Committee precisely because the extraction of this value is too much of a priority not to have the bank represented at the highest levels of the parent company.

Nedbank is a very well run business and - within the disciplined and prudent banking environment which is the South African banking regime - has weathered the effects of the global credit crunch well. South Africa this year is predicting a positive rate of GDP growth and the growing middle markets are more and more coming into the banking system. As the needs of this group develop, the broader financial services and products, provided by Nedbank, Old Mutual and Mutual and Federal in a co-ordinated and planned way positions us well to capture a greater share of this market.

How do you intend to create value - what's your investment proposition?

One aspect of creating value will be the building of our core capabilities into markets where we are under- or un-represented. Old Mutual's brand and reach, and its competencies in the long-term savings arena are highly regarded in South Africa and these can be deployed elsewhere.

South Africa itself is a strong and resilient economy and we expect growth there for some time. Africa as a whole is also presenting new opportunities for both banking and long-term savings and there is every reason to believe that Old Mutual can capture a significant share of this.

Skandia, also in the long-term savings cluster, has a leading open-architecture platform perfectly suited to the growing swathes of customers and intermediaries requiring flexibility, transparency, value for money and choice. Skandia is dominant in Sweden and the UK. Our growing presence in selected European countries is encouraging and will develop even further.

Value will be created through using the excellent group competencies productively. We are able to use our scale to reduce our unit costs. We are able to deploy our skills developed in one part of the world to bolster capabilities in others.

When you buy into the Old Mutual Group you are buying scale, management's ability to extract value from their own business - and through synergies and co-operation with other businesses. Our incentive structure is designed to encourage this group behaviour.

Most companies claim that their people are their most important asset. How important are people in the delivery of your high priority objectives?

People are extremely important to Old Mutual. We know no other way of delivering our results. We recognise in particular the contribution that effective teams as well as talented individuals make to Old Mutual.

We have built programmes for each and every level of employee to take care of their personal growth and team development as valuable and valued individuals. And while we acknowledge an employee's first allegiance will always be to his or her local business, the influence and role of the greater Group are always prominent in this sense of belonging. Incentive structures stress the importance of the Group performance as well as that of local businesses.

Being international gives employees the chance to avail themselves of international opportunities across the Group adding to the richness of our diversity and leveraging specific talents where we can.

We take our Corporate Responsibility very seriously. We believe that personal involvement in causes and issues gives our employees an added sense of purpose and feeling of giving back to the society in which they live.

Whether this is building houses for the homeless in South Africa or rowing a boat from Perth to Mauritius in aid of a charitable foundation, Old Mutual encourages and supports its people and their personal and corporate role in society as part of their membership of the Group.

What factors influenced the final structure of the Group?

We are in eye of an unprecedented global financial storm. The choices we make about how we operate and the shape we would like to adopt have been taken in the context of the current market turmoil.

One of our priorities is to streamline our portfolio, which means we will have to make tough choices where there are businesses that don't fit with our longer-term focus, are subscale with little prospect of achieving critical mass or create a dilution of management focus and create unacceptable risk. But we are not prepared to streamline in an environment where there is little appetite for corporate transactions or when asset sales result in value destruction.

So we have to wait until markets stabilise or unusually attractive terms are presented. We will not compromise the creation of shareholder value just for elegant strategic alignment.

In the meantime, businesses which may fall into this category continue to be well managed and contribute to the Group.