Report to

society 2010

Enter our sustainability model

Click a link or turn to a page listed below

Business strategy
CEO Statement – pg 1
Stakeholder
Corporate Profile – pg 4 engagement – pg 9
Financial and Non-financial
Highlights – pg 5

Third line
controls
Report
parameters – pg 2
Independent
assurance – pg 3
Stakeholder
Risk Management controls & performance
controls & Employees – pg 10
governance
Customers – pg 13
Key risks and
opportunities – pg 21 Suppliers – pg 14
Communities – pg 15
ESG risk in focus – pg 21
Natural environment – pg 18
Back to contents

CEO’s statement

FROM THFE
DESK O
The key elements of RMB’s business strategy include:

• a redefined risk appetite

• a desire to grow the South African business
• covering clients across the Corporate and Investment Bank
• growing our African footprint
• mining the Africa/Asia trade and investment corridors
• continuing to preserve, grow and diversify RMB’s talent

This fits in well with the FirstRand Group’s consolidation and refinement of strategy in light of the turmoil in the
global operating environment and the economic slowdown in South Africa during the last two financial years.

As part of our strategy, and in response to the current environment, RMB (and all brands within the
Group) expect to become increasingly focussed on managing costs and achieving greater efficiencies in
order to achieve our objectives of delivering superior sustainable returns to our shareholders, providing
innovative solutions to our clients, while simultaneously finding ways to improve processes to achieve
further efficiencies.

We believe that our continued success and relevance is due to our recognition that sustainable business
practices remain even more important than ever during times of uncertainty.

After an analysis of our people practices and strategies, we reinforced our commitment to talent by
repositioning the areas of Human Resources, The Academy and Payroll as Human Capital. Human
Capital’s strategic purpose is to partner with RMB leadership and line management to enhance the RMB
employee experience.

Our Environmental Social and Governance (ESG) reporting process has identified and prioritised key
non-financial risks that pertain to the RMB business. For example, compliance with Environmental and
Social Risk Assessment (ESRA) requires that our employees are trained in what is required of them in
their respective roles, to ensure that all business we engage with is appropriate. This process is now well
under way.

The ESG process has also highlighted our workforce profile as a medium risk which should be monitored
continually, while we take proactive steps towards effective transformation. These include more thorough
monitoring of employees who enrolled in and benefitted from RMB’s R17 million investment in skills
development during the financial year, ensuring that this investment is used most effectively, as well as
paying even closer attention to the attraction and retention of our people.

By integrating these and other appropriate processes into the daily running of the business, we are able
to highlight indicators that can be used to benchmark our sound sustainability strategy, which will enhance
our long term financial success.

Alan Pullinger
CEO

RMB Report to society 2010 1

Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

Report parameters

The information reflected in this report pertains to the financial year ending 30 June 2010 which is to
be read in conjunction with FirstRand’s integrated report for the same period. A detailed review of the
accounting policies employed by the FirstRand Group is available in the integrated report which can be
accessed on the company website: www.firstrand.co.za.

Use of guidelines
RMB’s non-financial accounting policies are aligned to the Global Reporting Initiative’s (GRI) G3
guidelines and financial sector supplement, incorporating recommendations set out in the King
Committee on Governance’s Code of Governance Principles for South Africa (2009) (King III Code), the
JSE Socially Responsible Investment (SRI) index, and the BEE transformation requirements set out by
the Financial Sector Charter, and the Department of Trade and Industry’s (dti) Codes of Good Practice.

Materiality
Material topics are defined as those reflecting significant economic, environmental and social impacts
or those that would influence the decisions of the company’s stakeholders. The material topics
disclosed in this report have been informed by regulatory obligations, internal financial and non-financial
management reports and voluntary disclosure standards.

Stakeholder inclusiveness
The principle of stakeholder inclusiveness has been employed to ensure that disclosures are material
and relevant to the legitimate interests and expectations of FirstRand’s stakeholders. The primary
vehicles informing stakeholder disclosures are the Group’s integrated financial and non-financial risk
management reports and significant regulatory events.

Data measurement
Data measurement techniques are replicable and information is not reported if the margin for error
is believed to influence substantially the ability of stakeholders to make informed decisions about
the company’s performance. Measurement techniques, estimates and underlying assumptions are
described when it is materially necessary to do so. Carbon footprint calculations are made according to
the Greenhouse Gas Protocol’s Corporate Accounting and Reporting Standard.

COMBINED ASSURANCE
FirstRand has commissioned the following independent sources to provide assurance and commentary
on its 2010 divisional sustainability reports:

• BEE transformation performance has been externally audited by SizweNtsaluba vsp

• FirstRand’s carbon footprint data has been externally prepared by Merchantec Carbon and
independently assured by FirstRand Internal Audit
• Corporate Social Investment information has been prepared by Tshikululu Social Investments and
externally audited by Deloitte
• FirstRand Group Internal Audit performed a limited review of the statements and quantitative data
contained in the divisional Reports to society

RMB Report to society 2010 2

Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

ASSURANCE STATEMENT
Based on the results of the work performed, this sustainability report:

• p
 rovides confidence in the information presented within the report. The level of data accuracy was
found to be within acceptable limits, but additional improvements were recommended to management
to reduce potential for minor anomalies and misstatements;
• appropriately reflects environmental, social and economic performance achieved during the period;
• represents a fair statement of FirstRand’s corporate social responsibility initiatives;
• contains quantitative data which is free from material misstatement.

Notwithstanding that the data collection process is sufficiently transparent, RMB shows continued
improvement and refinement on its method of collecting data for the sustainability report to ensure an
even more accurate result. All suggested changes were satisfactorily addressed by RMB management
prior to finalising the report.
Overall, FirstRand internal Audit is satisfied that the report is an appropriate representation of RMB’s
sustainability performance during the reporting period, based on the limited material sampling approach
applied to the assurance engagement.

Jenitha John,
FirstRand Chief Audit Executive
14 September 2010

APPROVED

RMB Report to society 2010 3

Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

Corporate profile

The Rand Merchant Bank (RMB) brand can trace its origins back to 1977 when a small structuring house was
founded by Paul Harris, Laurie Dippenaar and GT Ferreira, with an initial start-up capital of only R10 000.
The founders’ vision, drive and complementary strengths transformed their fledgling business into Rand
Merchant Bank, one of South Africa’s leading investment banks, with a full-service product offering of
advice, finance, trading solutions, investment opportunities, fund management and research.
Although RMB Private Bank and RMB Asset Management carry the RMB brand, their operational reporting
is into FNB and Momentum respectively, and is included in those reports.
RMB is headquartered in Johannesburg, with satellite offices in Durban, Cape Town, Port Elizabeth and
Stellenbosch.

COMPANY STRUCTURE
Rand Merchant Bank Limited (RMB) is a division of FirstRand Limited. It is the investment banking and
financial markets arm of the FirstRand Group, one of the largest financial services groups listed on the
JSE. RMB services include corporate finance, structured finance, project finance, fixed income, currencies
and commodities trading, equities trading and prime broking.
Our core business is investment banking. We focus on large corporate clients that are usually listed on
the JSE, black economic empowerment (BEE) companies, multi-nationals operating mostly in southern
Africa, financial institutions and various public sector entities.
Our clients typically operate in the sectors of manufacturing, transport and logistics, infrastructure, mining
and commodities, leisure, building and construction, healthcare, retailers, telecommunications and media,
financial services and the public sector.

CORPORATE GOVERNANCE
“RMB exports head The directors of FirstRand and the Group’s divisional boards endorse the Code of Corporate Practices and
office corporate Conduct contained within the King Report on Corporate Governance for South Africa 2009 (King III Code).

governance The King III Code came into effect for companies starting a financial year on or after 1 March 2010. During
the year under review, significant progress has been made in respect of applying the King III Code. The
standards when
Group has undertaken the following:
conducting business
internationally.” • c onducted an enterprise wide gap analysis of the Group’s governance practices compared with those
recommended in the King III Code
• updated Board and Board Committee charters to reflect recommendations made in King III
• identified actions for achieving timely application of King III in cases where gaps have been identified
• initiated projects and Board reporting against these for timely application of the Code

Key areas being addressed include more formal oversight of:

• enterprise-wide Information Technology (IT) governance

• the institutionalisation of the Group’s code of ethics
• the strategic management of sustainability and stakeholder considerations
• the development of more clearly defined processes for alternative dispute resolution taking all parties
into account and perceiving business relationships as a fundamental of good governance.

RMB Report to society 2010 4

Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

Highlights

FINANCIAL HIGHLIGHTS
2010 2009 % change
Income before indirect tax (R’000 000) 4 687 2 134 >100
Indirect tax (R’000 000) (64) (79) (19)
Income before direct tax (R’000 000) 4 623 2 055 >100
Total assets (R’000 000) 268 819 275 097 (2)
Cost to income ratio (%) 45.2 56.6 –

A more detailed financial report can be seen in FirstRand’s integrated annual report which is available on
the company website (www.firstrand.co.za).

NON-FINANCIAL HIGHLIGHTS
2010 2009 % Change
Workforce 1 419 1 339 6
ACI employees 682 594 15
BBBEE procurement spend as a % of total spend (%)* 58 52 –
Skills development investment per employee* (R) 11 980 10 500 14
Energy consumption per employee (Kw/h) 8 180 8 467 (3)
*Financial Year (FY) 2010

RECENT AWARDS & RECOGNITION

RMB has been publicly recognised in many areas and is consistently rated number one – often for
consecutive years – in a wide variety of areas, a few of which are mentioned below:

Spire Awards – 4 November 2009

The awards recognise excellent individuals and teams who contribute to the bond market in South Africa.
Voters for the award recipients include clients and bond issuers. In November 2009, RMB was among
the top three recipients in 14 out of 20 categories at the ceremony in Johannesburg, coming first in four
categories:
• Best repo team
• Best inflation-linked debt house
• Best general fixed income analyst
• Best interest-rate derivatives sales and structuring team
RMB was also awarded second place in a further eight categories.

2009 Africa Investor Infrastructure Awards – 27 October 2009

The RMB Infrastructure Finance team won the category Social Infrastructure Deal of the Year for the
Department of International Relations and Co-operation Public-Private Partnership.
RMB played the role of lead arranger and underwriter of the senior debt and is also a shareholder in
the consortium. It was the first PPP to be owned by majority BEE and women-owned companies, and
included a lender as a minority shareholder. It was also the first SA PPP to use CPIX-linked senior debt.
Africa Investor, a leading international investment research and communications group, designed the
Awards to highlight and profile exceptional business practices and economic achievements across the
infrastructure spectrum in Africa. They recognise innovative projects and reward the personalities who are
driving transactions and improving the continent’s infrastructure investment climate.

RMB Report to society 2010 5

Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

Risk Magazine – 2009

“Sustainable
RMB won seven out of 23 awards in the Risk magazine SA Derivatives Dealer Survey 2009. It was rated
business practice 2nd or 3rd in nearly all the remaining categories (except for two, where RMB came 4th).
creates and Winning categories include:
protects value for all
• Overall winner in the currency, commodity and equity categories
stakeholders through
• Product winners for: interest rate swaps; inflation; USD/ZAR currency swaps and USD/ZAR currency options
effectively managing
RMB was second overall for Risk management advisory as well as FRA’s, SA equity index options, exotic
the financial and
equity options, equity derivatives, warrants and credit default swaps.
non-financial risks
and opportunities
impacting the NON-FINANCIAL KEY PERFORMANCE AREAS (KPAs)
Non-financial KPAs have been identified in accordance with their relevance to the management of ESG
company’s ability to
risk and certain non-financial value drivers supporting RMB strategy. Historical performance in these
generate sustainable areas is presented in order to give a high level overview of RMB’s performance against key sustainability
profits.” risks and opportunities.

Workforce profile Workforce profile by race

The workforce profile shows the absolute number
(number of employees)
and % representation of ACI employees according to
the dti Codes of Good Practice (COGP). This is an 1500
indicator of RMB’s progress towards its workforce
transformation objectives.
1200

Analysis 900
RMB has seen a gradual increase in the representation
of ACI staff. This increase is supported by the Bank’s
600
emphasis on development of existing employees through
effective talent management and skills development
300
programmes.

0
2010 2009 2008

Total White
Total African, Coloured and Indian

RMB Report to society 2010 6

Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

Skills development investment per Skills development per employee

employee (R 000)
Skills development investment is measured as the
12.5
rand amount spent on skills development per RMB
employee. This indicator is related to processes for
continually improving productivity, staff satisfaction 10.0

and retention.
7.5

Analysis
5.0
During the year RMB significantly increased the skills
development investment per employee, in line with
the Bank’s emphasis on skills development as a talent 2.5

management tool and key non-financial value driver.

0.0
2010 2009 2008

BBBEE procurement as a % of total BEE procurement

procurement (%)
BBBEE procurement is measured as the percentage
60
of total procurement spend attributable to suppliers
qualifying as BBBEE suppliers in terms of the dti COGP.
58
The indicator provides insight into RMB’s performance
in supporting socio-economic transformation through
56
effective supply chain management.
54

Analysis
52
During this financial year RMB achieved and exceeded
a BBBEE performance target of 53%.
50
Sustainability opportunities: Sustainability
opportunities are identified through organic growth of 48
the business and the implementation of sustainability 2010 2009 2008
solutions at business unit level, as well as RMB’s
participation in FirstRand’s Sustainability Forum and
Environmental Forum. These forums actively pursue
sustainability opportunities through research and
development and, where necessary, incubate new
projects until mature enough to be fully integrated into
the operations of the business unit concerned.

RMB Report to society 2010 7

 Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

Environmental and Social Risk Analysis (ESRA)

ESRA forms the foundation of RMB’s ability to manage the environmental and social impacts of the
activities undertaken by the Bank’s clients and suppliers. ESRA training and performance management
has been developed and roll-out commenced during the year. See page 20 for more detail.

Equator Principles and ESRA roadmap

Continuous
monitoring of Implement
Development of policy compliance to set Recommendations
for Operations and processes and from continuous
Subsidiaries and annual review monitoring
capacity building Affected Operations to of policies and
Development of internally within implement improvement processes
a FirstRand level FirstRand with a focus recommendations from
policy relating to on Equator Principle Internal Gap Analysis
the management of compliance initially
environmental and
social risks in lending
Review of
(July 2009)
expansion of
processes to
Implement other lending
recommendations activities not
from Internal included in
Audit or Internal ESRA
First year of Assurance
complete statistics Processes
Internal Gap Analysis
for Equator
to be conducted by
Principles projects
FirstRand Corporate
as well as ESRA
Centre in relation to
lending
ESRA and Equator
Equator Principles Principles
Signatories (July 2009)

Year 1 (Grace Period): Year 2 Year 3 Year 4:

Develop corporate and divisional policy Implement systems Second year of Expand review
Build internal capacity Report data implementation processes

Develop risk assessment processes Internal audit and assurance processes Improve processes Continuous
related to systems improvement

RMB Report to society 2010 8

Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

Stakeholder engagement

RMB’s stakeholders are defined as entities and individuals that are significantly affected by our activities,
and those who are able to significantly affect our ability to implement strategies and achieve objectives.
We have identified our stakeholders as Regulators, Shareholders of FirstRand Limited, Employees,
Customers, Suppliers, Communities and the Natural Environment.
RMB’s stakeholder engagement includes direct contact, and indirect contact through communication
channels such as websites, advertising, press releases and relevant internal communications.
Regulator and shareholder engagement is not detailed in this report because FirstRand Limited has the
most direct interface with regulators, shareholders and investment analysts. Details on these engagement
processes are published in FirstRand’s integrated annual report.
Stakeholder engagement mechanisms and feedback flow into RMB’s non-financial reports and ESG risk
management profiles, which allows management to make informed decisions in respect of financial and
non-financial issues affecting our relationships with all stakeholders.

Employees
Methods for employee engagement include: face-to-face communication, electronic media, employee
surveys, forums, circulars and newsletters, and interactive sessions.
Attracting and retaining top talent is a strategic priority. This is achieved with an open-door policy that
provides access to senior leadership. We also have quarterly CEO feedback sessions where our
employees are kept informed of financial and non-financial performance and other relevant issues.

Customers
As our client base is relatively small, our Business Development Directors engage with them personally.
This, combined with our extensive customer engagement, has negated the need for client surveys thus far.
RMB’s customer engagement channels include: face-to-face communication, electronic media,
transactional communication, surveys, circulars, conferences, media briefings and press releases.
Information and feedback received is addressed by the relevant business unit, and where necessary by
RMB’s governance structure.

Suppliers
Primary engagement channels for suppliers include face-to-face communication, transactional
communication and surveys. Information and feedback obtained via these communication channels is
addressed with an appropriate delegation of authority of the Exco via the procurement function.

Communities
RMB’s direct community engagement relates to the Corporate Social Investment (CSI) activities of the
RMB Fund and employee volunteers through the RMB Hug Fund. Here engagement channels include
one-on-one, face-to-face engagement, stakeholder meetings, newsletters, television and a range of
electronic media.

The Natural Environment

During the year RMB engaged with the following external stakeholders in the development and
implementation of measures for effectively managing its direct and indirect environmental impacts via
FirstRand’s Environmental forum: Business Unity South Africa (BUSA), South African National Business
Initiative (NBI), The British High Commission and The British Commonwealth and Foreign Office, South
African Department of Energy, South African Department of Water and Environmental Affairs, and the
United Nations Environmental Programme Finance Initiative (UNEPFI).

RMB Report to society 2010 9

 Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

Stakeholder controls and performance

Disclosures in this report reflect the information that RMB understands to be most relevant to its business
and stakeholders and are made according to stakeholder categories.

EMPLOYEES
Employee performance indicators
Staff complement at 2010 2009 % Change
July 2010 Staff complement (permanent employees) 1 419 1 339 6
ACI staff 682 594 15
White staff 712 722 (1)
2010 Foreign Nationals 25 23 9
1 419 people
Female staff 704 664 6
Male staff 715 675 6
ACI Skills development investment (R mil) 7 6 17
Workplace injuries 2 1 –
6%
Workplace fatalities 0 0 –
Skills development investment (R mil)* 17 14 24
Skills development investment per employee 11 980 10 500 14
*Skills development investment as per prior calendar year dti submission = R21 million

2009
2010 workforce 2010 workforce
1 339 people
profile by race profile by gender
(%) (%)

ACI Staff 48% Female 50%

White staff 52% Male 50%

RMB is in the business of attracting, retaining and developing the best talent for its needs. Our human
capital strategy focuses on investing in our staff – the Bank’s talent. After an analysis of our people
practices and strategies, we reinforced our commitment to talent by repositioning the areas of Human
Resources, The Academy (responsible for employee learning, training and development) and Payroll
into one division, Human Capital, with the strategic purpose to partner with RMB leadership and line
management to enhance the RMB employee experience.

This process resulted in the development of a new operating model that focuses on people, processes
and technology, which will deliver an improved and integrated process to better support a high-performing
and engaged workforce. The model is powered by the same technology that will manage and coordinate
all the people-related resources, information and functions for RMB, together with the rest of the FirstRand
Group. Implementation of this operating model and technology commenced in June 2010.

RMB Report to society 2010 10

Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

Remuneration: RMB’s remuneration practices align with those recommended by FirstRand’s

Remuneration Committee and are approved by FirstRand’s Board of Directors and shareholders. A
detailed review of the FirstRand Group’s remuneration practices is available in the integrated report which
can be accessed on the company website: www.firstrand.co.za

At RMB, salaries are reviewed annually in the context of the individual’s and respective business unit’s
performance, inflation and specific industry practices and trends. Reference is made to independent
salary surveys and consultation with relevant parties. All employees are required to belong to a medical
aid scheme, and 99.85% are covered by defined contribution plans including a defined pension and/or
provident fund.

Leadership Immersion: Following a process seeking to understand the strategy around people,
leadership, culture, diversity, support initiatives, financial feedback and other business issues, RMB
finalised a unique RMB Leadership Brand during the first quarter of 2010, after an intensive consultation
process with the full leadership community within RMB.

This process produced valuable feedback indicating a level of confusion between our culture and our
values, as well as a sense that our culture may be experienced differently in different areas of the Bank.
Before commencing with the next step of our Leadership Brand initiatives some context and analysis of
the makeup of our culture was provided, through the following formula:

• RMB Principles + Values + Leadership Brand = RMB’s Culture

The articulation of values has been left to each area within RMB, and should be a reflection of the values
that are currently most important to the area. Values in a specific area may change in time and may well
be different to the values in another. Chosen values should not conflict with the RMB Principles. Given that
values could differ between business units, it is likely that one could experience a different culture between
areas within RMB. These differences should not be substantial, given that the RMB Principles and the
Leadership Brand remain the same.

Leadership Brand attributes

Principled Humility Wisdom Courage Partnership Generosity Inspirational

Employment Equity Committee: The RMB EE committee has met a number of times during the past
year. These included a strategic planning session focussed on the following areas:

• Roles and responsibilities of EE stakeholders

• Phases of the EE plan
• The EE plan process model
• FirstRand framework for conducting section 19 analysis
• Department of Labour reports
• Increased communication between RMB’s Management Board and the EE Forum

The Head of Transformation has held meetings with various business heads for their input and the revision
of the EE plan is in full swing.

Graduate Programme Recruitment – pipeline for future EE talent: RMB launched its on-line Graduate
Programme recruitment system in May and has had over 500 applicants. The Young Talent Team has met
with the Heads of Business Units to ascertain the number of graduates each area is able to accommodate,
as well as the skills required. We hope that the majority of graduates will come from our annual Winter
School Programme, and any additional hires will happen through our Campus Recruitment activities.
For example, we hosted the Actuarial Science and Maths of Finance Honours classes from University of
Witwatersrand (Wits) at RMB in the month of July.

RMB Report to society 2010 11

Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

Training and development

“The RMB Academy
The RMB Academy operates within the integrated Human Capital (HC) environment. One of the benefits
supports divisions of this is that the HC Learning and Business Partners can provide combined support and direction to
with a variety of business with regard to their employees and their development requirements. The team assists employees
alternative learning to develop individual learning plans which flow from personal or performance discussions with their line
methodologies and managers, HC Business or HC Learning Partners.

arranges in-house The RMB Academy’s pursuit to assist employees in their sharing of knowledge, whether through mentoring,
learning events that technical coaching, small group learning sessions or a variety of other interventions is ongoing.
allow employees to The past year has seen immense development in:
tap into the immense
• Leadership development
knowledge and skills • Coaching and mentoring
base that resides in • An Investment Banking 101 programme to provide support Specialists with an understanding of the
the Bank.” world of Investment Banking and other technical/product specific programmes tailored for an investment
banking environment.

The RMB Academy, together with other stakeholders, will continue to design, improve and enhance learning
programmes, in order to deliver on people development linking with our focus on talent management.

Health and safety

Health and safety is managed at RMB via FirstRand Banking Group’s Environmental Health and Safety
office. This programme has a reporting line to the board of directors via the Group’s Audit, Risk and
Compliance Committee.

During the 2010 financial year we reported zero fatalities and had two cases of injury on duty, both
reported to the Workmen’s Compensation Commissioner.

Every eighteen months, business units undertake a process of reviewing health and safety risk
assessments as a proactive step to minimise incidents, and employees are made aware of potential
risks and control measures to mitigate them. An incident reporting process has been communicated to all
employees in the Bank. FirstRand has appointed Corporate Industrial & Risk Consultants to attend to all
workplace injuries and provide monthly incident statistics.

Every quarter, FirstRand Banking Group’s Corrective Action Log Committee discusses all incidents of
non-compliance with the relevant Subject Matter Experts (SMEs), including an occupational health and
safety SME, to ensure that incidents are resolved and measures are taken to prevent re-occurrence.

Executive Medicals: RMB employees are nominated by the Management Board to undergo an
executive medical. This covers all aspects of health, from fitness and nutrition, to stress management
and sustaining peak performance.

RMB Report to society 2010 12

Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

CUSTOMERS
Our core business is investment banking. We focus on large corporate clients usually listed on the JSE,
black economic empowerment companies, multinationals operating mostly in southern Africa, financial
institutions and various public sector entities. Our clients typically operate in the following sectors:
manufacturing, transport and logistics, infrastructure, mining and commodities, leisure, building and
construction, healthcare, retail, telecommunications and media, financial services, and the public sector.

Our strategy is to establish strong, long-term client relationships and to offer innovative and relevant
financial solutions that add significant value.

Infrastructure finance
We provide financial solutions to the infrastructure sector across Africa and have been involved in a
number of landmark deals throughout the year. These include:

• A quarius Platinum: RMB coordinated and jointly advised Aquarius on a complex, multi-jurisdictional
funding solution to raise R2.3 billion which significantly strengthened the mining company’s balance
sheet and competitively repositioned it to take advantage of opportunities presented by the market. The
deal won the Banker Award for Restructuring Deal of the Year in Africa.
• Anglo Platinum: In a deal which strengthens its longstanding relationship with Anglo Platinum, RMB
advised the company on its recent, substantially over-subscribed rights offer. Underwritten by Anglo
Platinum’s parent company, Anglo American, the rights offer has rebalanced the company’s capital
structure, allowing it to focus on optimising value from its premium portfolio of assets
• Eskom: In a deal that highlights our expertise in credit finance, RMB assisted Eskom in financing an
offshore boiler contract for its new Kusile power station – the first Rand-denominated export credit
deal of its kind. By facilitating cross-border capital expenditure, RMB unlocks business opportunities in
South Africa, Africa and the world.

BEE funding
RMB acts in various capacities in some of the largest BEE and
BEE-related transactions in the country. These include:

•  irstRand Empowerment Trust: Acting as lead advisor and

F
debt arranger, RMB implemented the scheduled refinancing of
R3.4 billion of funding for the FirstRand Empowerment Trust,
which has generated in excess of R4 billion in value for the
BEE partners, of which R200 million has been released to the
BEE partners as part of the refinancing. RMB structured and
implemented the refinancing together with FirstRand’s new
strategic partner, China Construction Bank, as well as other
local banks and financial institutions.
• Optimum Coal: RMB’s ability to provide innovative, short
timeline financial solutions tailored to suit Optimum’s specific
needs, has lead to multiple deals and a mutually rewarding
partnership since this client’s inception. In the latest six-year
deal, RMB has structured a complicated three-component
solution involving R1.15 billion.

Note: Platinum mining is a contributor to social and economic

development. Balancing this reality with our sensitivity towards
the environment, the incorporation of Equator Principles in Project
Finance will mitigate against environmental and social risks
involved in deal making and enhance RMB’s position as a leading
investment bank.

RMB Report to society 2010 13

Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

Highlight from November 2009: Talk Radio 702 Hero acknowledgement

“This is an example
RMB’s Bankers without Borders television advertisement was awarded the prestigious HERO
that you don’t need acknowledgement on Talk Radio 702’s Ad Feature show.
to be overly clever
Andy Rice, a well-respected industry critic, commended the RMB ad for being a good idea coming
in advertising. A together with both good copy and a good visual - proof that ‘you don’t need clever stunts to get across
good, simple idea, on your message’.
strategy, will always
beat anything else
hands-down... A
simple idea, simply
expressed” (Andy Rice)

SUPPLIERS
RMB interacts with just under 3 000 suppliers. Goals achieved include reaching our BBBEE Procurement
target of 53% within the calendar year; implementing the Oracle Procure-to-Pay system throughout the
business; implementing a procurement policy that enabled us to contract 300 suppliers correctly; and
implementing online travel approval, with trips being approved before tickets are issued.

Supplier performance indicators

Procurement indicators for FY 2010 2010 2009 % Change
Number of suppliers 2 766 3 058 (10)
BBBEE procurement spend (R’000) 300 946 265 164 13
Other spend (R’000) 215 247 241 432 (11)
Procurement spend (R’000) 516 193 506 596 2
BBBEE spend as a % of total spend 58 52 –

RMB Report to society 2010 14

Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

High level objectives 2010

• achieve BBBEE Procurement targets of 57% in 2010 and 70% by 2014
• collaborate with all Business Units when negotiating with new suppliers
• mitigate risk through negotiation and execution of legal contracts for all suppliers
• ensure policies are adhered to and breaches reported to the relevant Business Units
and the Risk Committee

Recent highlight
As of 1 June 2010, Nashua has taken over the maintenance of all our RMB’s printers – Gestetner, HP and
Nashua machines. This change has been implemented through a tender process and is intended to have
the following benefits once fully implemented:

• C ost saving: We have reduced our average cost price per page from 59c to 35c and will no longer
need to purchase machines. This will result in a R12.4 million saving over a 4 year period.
• Time saving: Nashua will monitor each machine and will ensure that paper and toner is replaced
before it is finished. This will eliminate the need to re-order.
• Improved efficiency: Nashua will have an on-site technician to address any device complaints.
• Improved processes: Capacity for large print jobs will be available.

COMMUNITIES
The RMB Fund is a member of the FirstRand Foundation, which was established in 1998 and is the
dedicated legal vehicle through which FirstRand directs social giving to meaningful community
development initiatives.

In order to do good business and good work, the RMB Fund ensures that there is synergy between our
business philosophy (“Traditional values. Innovative ideas.”), values and objectives, and those of the
projects and organisations with which we partner.

Through the RMB Fund, RMB directs 1% net profit after tax towards programmes in education (particularly
maths leadership and development), arts, culture and heritage, and the environment and conservation, as
well as employee volunteering.

Community investment indicators

2010 2009 % Change
Direct CSI
Maths leadership & development (R’000) 5 421 7 671 (29)
Arts, culture and heritage (R’000) 5 935 6 250 (5)
Environment & conservation (R’000) 3 855 4 982 (23)
Safe communities & social reintegration (R’000) – 240 –
Total direct CSI 15 211 19 143 (20)
Employee volunteer funds raised & matched (R’000) 2 147 1 116 92

RMB Report to society 2010 15

Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

Mathematics leadership and development

This programme builds on learning from extensive engagement and research into the most effective ways
to increase the number of school leavers with high-level mathematics qualifications, supporting centres of
excellence in maths leadership and literacy and upgrading teaching skills. Funding has also been provided
to Independent Schools’ Outreach Programmes, which often involve supplementary mathematics classes
for under-resourced schools. There are three focus areas within the education programme:

• Universities: key strategic relationships with good quality programmes

• C
 entres of excellence reaching out: relationships with organisations sharing their resources to
produce quality outreach programmes
• A
 dvocacy and research: these relationships help to guide our monitoring and evaluation strategy, as
well as keep the Fund informed of the education landscape so as to improve decision making

The FirstRand Foundation South African Maths Education Chairs Initiative, started in 2008/09, is a
flagship project of the FirstRand Foundation, in partnership with the RMB Fund, and has four inter-related
objectives over five years, which are to:

• p rovide leadership in mathematics education and increase the dialogue around solutions for the
mathematics crisis
• research sustainable and practical solutions to the national mathematics crisis
• improve the quality of teaching of in-service mathematics teachers at selected secondary schools
• improve the mathematics results (pass rates and quality of passes) in selected secondary schools, as
a result of quality teaching and learning

Three Chairs have been appointed after a rigorous recruitment process, and their initial progress and
achievements will be included in relevant 2011 reports.

Arts, culture and heritage

This programme seeks to support and celebrate South Africa’s diverse heritage and is structured to
encourage a healthy balance between the creation of equitable access to arts and heritage, while
continuing to promote the achievement of excellence through programmes in music and dance. Funding
supports partner organisations that:

• p rovide equitable access to disciplines of cultural expression to all South Africans, so as to grow
audiences, identify young talent and contribute towards nation building
• provide opportunities for talented cultural practitioners to achieve excellence in their respective crafts,
with a view to their being able to earn a livelihood from their honed gifts

Environment and conservation

We continue to support the preservation of the lesser-known but important “habitat-indicator species”;
participate in climate change initiatives and environmental programmes that demonstrate strong local
community buy-in; and environmental education projects aimed at school children. In addition, grants are
made for biological capital preservation, soil and water conservation programmes. The focus areas of the
environmental programme are:

• c onservation of vulnerable habitat indicator species (these indicate the state of their respective natural
environments and the resulting impact on humanity)
• the protection of biodiversity
• environmental education and skills training of learners, teachers, youth at risk, guides and rangers
• addressing climate change, including carbon sinking, to off-set carbon emissions
• research
• transformation of the sector (BEE job creation)

RMB Report to society 2010 16

 Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

Beyond the cheque book – RMB NGO Leadership Network

Sessions
These grew out of an interest in finding alternative ways to support NGOs in a
relationship with RMB and started with a trial session in April 2008. Our aims
were to volunteer business expertise to an NGO forum; help these NGOs to see
through a business lens; help business to see through an NGO lens and provide
opportunities for the NGOs to network and form a community of (best) practice.

The response was extremely enthusiastic and RMB has continued to host and run
sessions from November 2008 to date, taking participants’ feedback into account,
and increasing the footprint of this initiative, revising its format and increasing
its numbers.

Sessions are coordinated and hosted by RMB colleagues, Ilka Dunne, Yvette
Nowell and Happy Pooe, and the objectives, refined and developed in partnership
with participants, are to:

The RMB NGO Leadership Network Sessions received a • b uild a shared understanding of our future choices and responses in South Africa
Chairman’s Volunteer Award in December 2009, for the initiative • identify key capacities and actions in order to pursue our preferred future options
best aligned to the focus areas of the FirstRand Foundation.
Yvette Nowell (far right) also won the Barloworld Artworks Mentor
• highlight those skills, capacities and interests which exist in this group to help
of the Year Award in August 2009, for her voluntary partnership it move in this preferred direction
with the Valued Citizens Initiative. • create an environment to share these valuable contributions for the benefit of
all participants
• clarify the way forward in order to sustain and build on this sharing, and create
a community of practice

Employee volunteering
Our employees regularly commit their time, money and energy to a wide range
of charitable initiatives, generally in the areas of Community care (including
disabilities), Caring for children, Animal welfare and Caring for the elderly.

During the past financial year, these donations have included:

• A frica Food for Thought: RMB employees continue to contribute (e.g. 1100
blankets and 3 000 cans of food this Winter) to this organisation that assists
with feeding programmes at schools on the West Rand (about 10 000 children),
as well as home visits to child headed households in the area.
• Diepsloot Combined School: Chess training is offered in partnership with
Centurion Chess Club. Graduates installed a giant outdoor chess set at the
school as part of this initiative, and staff held a chess tournament as a fund raiser
towards this project.
• Animal Welfare organisations: Among other donations, we continue to settle
vets’ bills for sterilisations, as well as contribute towards community education
around the treatment and care of domestic animals.
• The Robin Good Initiative: We have paid for and assisted in the installation
The RMB Hug Fund, managed by Anneke van Zyl (right), received of vegetable tunnels at various locations in need of food and sustainable
a Chairman’s Volunteer Award in December 2009, for being the
best payroll giving programme in the Group
livelihoods, and are also looking at other creative partnerships with RMB
Catering and Hospitality.

RMB Report to society 2010 17

Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

NATURAL ENVIRONMENT
The effects of climate change have often been described as both an opportunity and a risk, which if
unmanaged, could result in major disruptions to economic and social activity. For business leaders of the
21st century, the disruptions are not a consideration of the future any longer but are now a reality.

We will continue to develop our carbon footprint reporting practices in order to ensure alignment with
international and national best practice, and consequently provide assurance to management on the
accuracy and reliability of the submitted information.

Environmental performance indicators

2010 2009 % Change
Carbon emissions (TCO2e)
Fuel Use (Scope 1) 15 79 (81)
Business Fleet Travel (Scope 1)* – 149 –
Electricity (Owned Buildings) (Scope 2) 16 647 13 306 25
Paper Use (Scope 3) 145 993 (85)
Business Air Travel 1 251 2 349 (47)
Business Road Travel 137 – –
Total CO2e 18 195 16 876 8
CO2e per employee (T) 12.8 12.6 1.6
*The RMB business fleet is maintained by WesBank and subsequently reported in the WesBank fleet vehicle data.

2010 2009 % Change

Utilities consumption
Water consumption (KL) 38 195 53 340 (28)
Energy consumption (Kw/h) 11 607 339 11 336 899 2
Energy saved (Kw/h)* 2 742 452 1 968 777 39
Energy consumption per employee (Kw/h) 8 180 8 467 (3)
* Energy saved is measured against the Eskom baseline year, from October 2006 to September 2007.

Environmental issues are monitored by the FirstRand’s Environmental Forum which comprises
representatives of FirstRand’s operating divisions and reports significant information to the Board of
Directors via the Audit, Risk and Compliance Committee.

Sizwe Nxasana, in his capacity as CEO of FirstRand and a member of the FirstRand Board, is responsible
for environmental issues, the approval of international and national submissions, and FirstRand’s Climate
Change Strategy.

RMB’s environmental impacts can be categorised as direct impacts and indirect impacts. Both direct and
indirect impacts are regulated through application of relevant legislation, subscription to voluntary external
regulations, and ongoing internal self regulation.

RMB Report to society 2010 18

Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

DIRECT ENVIRONMENTAL IMPACTS

Our primary direct environmental impact is through our operations at 1 Merchant Place, Sandton. This
property covers 26 170m² and accommodates most of RMB’s 1 419 permanent employees.

Materials and waste management

Various waste management procedures exist at RMB. In line with the requirements of the new National
Environmental Management Waste Act (Act 59 of 2008), RMB has processes in place via participation
in FirstRand’s Environmental forum for subscribing to a waste management strategy being developed by
FirstRand.

Water management
RMB’s operations are not water intensive. Where possible, water consumption is managed and reduced
on an ad hoc basis. For example, automatic sensor taps have been installed in 1 Merchant Place toilets
to minimise water wastage.

ENERGY AND WATER MANAGEMENT

Energy management
In 2010 RMB realised energy savings of 2 742 452 Kw/h, as measured against the Eskom baseline year
(October 2006 – September 2007), with an energy consumption of 8180 Kw/h per employee.

Energy saving initiatives continue and should show further savings during the next financial year. The
installation of motion sensors and energy-efficient lamps in key buildings, to reduce the use of after-hours
lighting have been completed at 1 Merchant Place. Air conditioning, IT and hot water efficiencies at these
premises are now being addressed.

Other initiatives including the piloting of deep energy efficiency retrofitting of buildings with the Clinton
Climate Initiative and extending the reach of existing projects to new premises, are well under way.

Carbon emissions and carbon management strategy

For the year ended June 2010, RMB’s greenhouse gas (GHG) emissions total was 18 195 metric tonnes
of CO2e, a contribution of 5% of the Group’s total emissions.
RMB electricity consumption is still the major contributor to its total GHG profile. Emissions from electricity
use decreased in 2008 compared to 2007, but have subsequently increased in 2009. This can be attributed
to the increase in the Eskom grid emission factor as well the increase in the cost per kWh (R0.40). Data
has been provided for all required greenhouse gas sources (excluding business fleet travel), indicating an
improvement in data collection, and overall carbon footprint quality.

The Group’s carbon reduction strategy aims to reduce the per capita GHG emission to 8.6 metric tonnes
by 2012. RMB’s carbon management strategy constitutes an important component for achieving this
target and is defined within the scope of FirstRand’s top initiatives to reduce Greenhouses Gas emissions.

These are:

• reducing energy consumption by at least 11% by 2012

• ensuring new buildings have ecologically friendly features, facilitating conservative use of natural resources
• encouraging paper intensive processes to be changed to paperless environments
• using video conferencing and telephone conferencing facilities to reduce travel

RMB Report to society 2010 19

Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

“FirstRand’s INDIRECT ENVIRONMENTAL IMPACT

adoption of the Equator Principles and Environmental and Social Risk Analysis
FirstRand became an Equator Principles Finance Institution in July 2009 by becoming a signatory to
Equator Principles
the Equator Principles. These principles apply to all structured project finance activities, as defined by
demonstrates the
Basel II, where the capital costs associated with the project are above US $10 million.
Group’s long-term
RMB has committed to extending Environmental and Social Risk Analysis (ESRA) practices beyond
commitment to
transactions accounted for in terms of the Equator Principles. The ESRA process is based on the Equator
socially responsible Principles requirements and will form part of the loan application process for the affected lending activities.
banking practices.” About 60 staff members have had informal presentations on ESRA and the Equator Principles, and a
formal training plan is to be rolled out during the coming months to ensure that business we engage in is
properly scrutinised.

ESRA assessment may include:

• a review of environmental legal permits

• a review of independently prepared social and environmental studies
• the review of clients’ management practices relating environmental and social risks to their activities
associated with the lending process

RMB Report to society 2010 20

Back to contents

Independent Business Stakeholder Stakeholder controls Risk management

assurance strategy engagement and performance controls and governance

SUSTAINABILITY RISKS AND OPPORTUNITIES

Integrated control framework
During the year under review, progress was made in further integrating Environmental, Social and
Governance (ESG) risks within RMB’s internal control framework. The outcome of this approach is an
even more integrated process of managing and reporting on the financial and non-financial performance
of the Bank.
FirstRand’s Board of Directors and its committees provide the highest level of oversight for ensuring that
business strategy and risk tolerances are set in line with the realisation of sustainable profitability and the
sustainable development of the Group’s operating environment. Effective integration of our financial and
non-financial controls allows RMB to view every transaction with every stakeholder as a sustainability
opportunity.

ESG RISK IN FOCUS

What priority ESG issues are being addressed by RMB in the coming year?
Current sustainability priorities include investing in employee development and retention, maintaining
progressive business client relationships, managing our carbon footprint, and continuing to implement
ESG risk management processes in line with FirstRand’s adoption of the Equator Principles.
(Christine Diack; Structured Finance)

What are some of the drivers behind RMB’s implementation of an integrated

financial and non-financial control framework?
RMB’s environmental, social and governance (ESG) performance is independently evaluated on an annual
basis through FirstRand, and has been enhanced more recently by a formal internal ESG risk reporting
process, as vital to us as the financial reporting of the business. Failure to take into account relevant ESG
risks, processes and measures, could result in civil and criminal penalties, reputational damage, loss of
business and unnecessary staff attrition, all of which pose a significant threat to sustainable business.

(Camilla Allison; Risk & Compliance)

Can ESG performance be linked to financial success?

There is a strong link between the ESG risk reporting process and financial success. By integrating this
process into the daily running of the business, we are able to highlight indicators that can be used to
benchmark sustainability opportunities and the development of a strategy that is truly sound.
(Yvette Nowell; Head of the RMB Fund & Coordinator of Sustainability & ESG Risk Reporting)

Sign-off
This report was compiled by Yvette Nowell and Lindy McWilliams, and signed off by Alan Pullinger,
CEO Rand Merchant Bank.

On 13 September 2010,

At 1 Merchant Place, Sandton, Johannesburg

Yvette Nowell Lindy McWilliams Alan Pullinger

CHECKED
RMB Report to society 2010 21
Back to contents

Business Third line Stakeholder Stakeholder controls Risk management

strategy controls engagement and performance controls and governance

Company information
Postal address
PO Box 786273, Sandton, 2146
Telephone: +27 11 282 1808
Telefax: +27 11 282 8088
Web address: www.firstrand.co.za

Sponsor
(In terms of JS E requirements)
Rand Merchant Bank (a division of FirstRand Bank Limited)

Corporate Finance
1 Merchant Place
Cnr Fredman Drive and Rivonia Road
Sandton, 2196
Telephone: +27 11 282 1847
Telefax: +27 11 282 8215

Transfer secretaries – South Africa

Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001

Postal address
PO Box 61051, Marshalltown, 2107
Telephone: +27 11 370 5000
Telefax: +27 11 688 5221

Transfer secretaries – Namibia

Transfer Secretaries (Pty) Limited
Shop No 12, Kaiserkrone Centre
Post Street Mall, Windhoek

Postal address
PO Box 2401, Windhoek, Namibia
Telephone: +264 612 27647
Telefax: +264 612 48531

RMB Report to society 2010 22