Absa CEO’s office had been a kind of presidency for a decade and a half, not fully engaged in the bank’s details.
This column was first published in Business Day.
In Absa’s short life it has had to remake itself more times than any company would want. Barely older than SA’s democracy and forged through combinations and compromises that echo the politics that played out around it, its search for a robust strategy seems never to be over. It is the youngest of our big banks but has arguably faced more overhauls than those multiples its age. The scars are evident and contributed to the surprise exit last week of its new CEO, Daniel Mminele.
To see how it got to this stage, we need to rewind. No sooner had Absa settled into its role as the SA subsidiary of Barclays, which swooped on it in 2005, than the British bank stunned with an exit in 2017.
Barclays robustly remade Absa in its image, tearing out the awkward culture that had preceded it, fostered under former Broederbonder Danie Cronje (first as CEO and then chair). Barclays chose Maria Ramos to be CEO in 2009 and gave her the task of completing that transformation. Within a year, five of the Absa executive committee had exited and Ramos had put in place replacements that were comfortable with the dual reporting lines to her and to bosses in each business unit in London.
But then the rug was pulled out. The board, with Barclays representatives left out of the room, began to forge a new strategy. The separation involved 266 distinct projects over three years, with Barclays picking up a R12.6bn bill for it. Planning for the future was done bottom-up, an alchemy of change management and strategy redesign. While Barclays had imposed strict rules and reporting lines, Absa now turned inward and reimagined an independent future.
In a sense, it was too successful.
Ramos chose to stay to deal with the Barclays fallout herself. It was a surprise to many that she would want to oversee the burning down and rebuilding of what had been her vision. It also made things tricky for succession as she would be handing over a 40,000-strong behemoth with a R1.5-trillion balance sheet and millions of customers, just getting over a divorce and in no mood for more change.
Ramos’s exit came suddenly in February 2019, but the transition to Mminele was slow. While the Absa board had identified him early, the intricacies of his departure from the Reserve Bank were complex, requiring a wait for his contract to end and six months of cooling off. Absa thus had a year with no permanent CEO, at exactly the time that the new structure was bedding down.
The post-Barclays era re-empowered local business unit leaders. Under Barclays, the SA CEO had become an oversight function sitting on the global Barclays executive committee (which itself was musical chairs under a series of Barclays CEOs), while the real business of banking happened bilaterally in business units. London was cut out of the picture, but the business unit structure was entrenched. The group CEO’s office did little to re-establish authority, compounded by the office being vacant.
The Absa Mminele found was a set of fiefdoms. The taking back of control had been baked in, and the CEO’s office had little of it. I wonder how different things might have been had Ramos left with Barclays and someone else had taken the job of rebuilding the bank for the future.
Mminele is a hands-on manager with an eye on the details. At the Bank and in his earlier commercial career he was well respected as a technocrat. He has a masterful insight into the financial system. In the slow handover of the CEO’s role to him, there was much discussion between him and the Absa board under chair Wendy Lucas-Bull about the remake he would find when joining. For a decade and a half, the CEO’s office had been a kind of presidency, not fully engaged in the details of the bank. But despite those engagements, Mminele arrived and found the job to be very different to that of a technocratic banker. It did not help that the Covid-19 crisis broke out shortly after, making it a job that had to be done largely by remote.
The Absa board clearly did not want to part ways and made every attempt to talk Mminele around, to accept the limited role he could play at least in the short term while he built authority over the long run. Both sides have given up, and the board decided a payment and separation is the least expensive option. It does not reflect well on them.
Who will be next? I expect that an internal candidate is more likely, though there will be pressure to appoint a black candidate. Absa has a strong layer of black leaders at the second tier, but the executive committee itself, particularly the most senior members, leans pale and male.
Complicating matters is that Lucas-Bull is set to step down next year. The board has been busy with a process of appointing her successor since January and an announcement should be made soon. It is surely a prerequisite to securing a new CEO who must, above all else, want to avoid overhauls.
• Theobald is chair of consulting firm Intellidex