Jacko Maree, CEO of Standard Bank, says when the company embarked on empowerment it did so to fulfil its obligations under the financial services charter.

“This gave us the guidance we needed and determined the size of the overall transaction to earn an appropriate number of points.

“Having arrived at the point where we knew we would be disposing of about 10% (currently valued at over R7bn) of our South African operations, we set about doing so in a manner that would produce the most benefit for our shareholders and that, over time, would produce the best result for the business,” Maree says.

He says at the time the bank took a controversial view that it was not going to expect its empowerment partners to bring business to the bank.

Maree says that when dealing with an operation the size of Standard Bank it is unrealistic to expect any individual or group of individuals to bring in any significant level of additional business.

“We were not doing the deal to extract value but to make a contribution to balancing our country’s past and to empower people who have been previously disadvantaged.

“In addition, we were contributing to the long-term sustainability of the business and the industry in which we operate,” Maree says.

In its initial plan the bank opted to break its 10% empowerment stake into three large segments, which has now grown to four segments.

The first 40% of the deal went to strategic equity partners Safika Holdings and the Shanduka Group. Two of the major shareholders in these companies are on Standard Bank’s board in their personal capacities.

“Strategic partners are people who can contribute at board level on the strategic direction of the business, rather than helping you run the business on a day-to-day basis.”

Another 40% was placed in trusts to benefit existing and future black managers and staff.

“We have about 3000 black managers who own a significant chunk of shares in the bank,” Maree says.

Recently, the bank announced that 10% of its empowerment shareholding will go to regional business entities through the Tutuwa Trust.

“These shares are going to 250 small and medium-sized enterprises with more than 50% black ownership and who have been operational since 2003. In addition, during 2005 they must have employed at least 10 people, and these companies must be in good standing with the tax authorities.

“In other words, we are seeking to have black-owned operating companies rather than investment companies.”

The Financial and Fiscal Commission has a formula that is used to determine how government money will be allocated to the various provinces. The formula takes into account elements such as gross domestic product, poverty and population. Standard Bank will use this formula to allocate shares to companies spread throughout the country to avoid a concentration of shares in one or two provinces. The balance of the shares has been allocated to communities, Maree says.

“The shares will be going to community structures such as non-governmental organisations that are doing good work in our communities,” he says.