Cape Town - Nedcor's share price fell to six-year lows yesterday as the market reacted to the surprise resignation of Richard Laubscher, its chief executive, and a warning from the banking group that earnings would not meet analyst expectations.
The share price shed 7.16 percent, or R5.31, to R68.90 yesterday, continuing a trend that has seen Nedcor lose more than half its share price value in the past 18 months.
Nedcor's management held a conference call with analysts yesterday to recap the details of the Laubscher resignation. Laubscher, ostensibly at a training centre with local and foreign delegates, was not on hand.
Chris Liebenberg, the chairman, said Old Mutual, the bank's majority shareholder, had not played a role in Laubscher's departure.
Questioned by analysts about the wisdom of losing a chief executive in the midst of a massive integration process following last year's acquisition of BoE, Liebenberg said there were various phases in any merger.
"The part where the chief executive plays a vital role is behind us."
The reorganisation was at a stage at which management was implementing plans and changes and it was unlikely a new chief executive could or would undo any of that now.
Liebenberg said "two or three" internal candidates stood in line for Laubscher's job, but external candidates would also be sought. Laubscher would not be the next chairman when Liebenberg resigned next year, because of a corporate governance requirement that there be at least a three-year gap between an executive directorship and chairman.
Financial director Stuart Morris said Nedcor had moved to align analysts' earnings forecasts because they were on the high side and would have implied about a 70 percent increase in second-half earnings over the first half's R4.45 a share.
Nedcor had been careful not to make a forecast as defined by JSE Securities Exchange regulations, said Morris, but a trading statement would be issued in November. Most analysts had already adjusted their forecasts.
Questioned why the bank's margins were narrowing while those of its competitors appeared to be widening, Morris said Nedcor's margins and revenue were generally more subdued because of a conscious decision to lengthen the funding book.
This was done to ensure additional liquidity following the volatility caused by the introduction of accounting standard AC 133 and the acquisition of BoE.
Over the next six months Nedcor would improve returns from the asset side of the balance sheet by selling core assets. Recent sales of Dimension Data (Didata) shares were an indication of this.
According to Bloomberg, Nedcor had cut its stake in Didata to 5.7 percent from 7.7 percent and said it might sell those shares as it raised capital to boost reserves.