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Why doesn’t Absa have a successor to Ramos?

This is nothing less than a failure of the board.

To describe the succession plan at Absa Group as ‘botched’ would be kind. In truth, there wasn’t one.

It is rather clear that the board seems to have been blindsided by CEO Maria Ramos’s decision to ‘retire’ at the end of February after she turns 60. They had ostensibly managed to convince her to stay on at least once before. She wanted to leave in 2016 and had previously communicated to the board her preference for a seven-year tenure. The decision by Barclays Plc (in 2016) to exit Africa meant she was practically forced to stay.

It is here where matters took an incomprehensible turn.

One needs to ask whether the board had a successor in mind in 2016? (I would suspect former chief financial officer David Hodnett’s name would’ve been on that shortlist.)

Regardless, after ‘persuading’ Ramos to negotiate the separation from Barclays plc and steer through its implementation, surely it would’ve been prudent of the board to commence a search for a new CEO almost immediately?

At that point, it knew the timeline for the separation process (which runs from 2017 to 2020). It was improbable that Ramos would’ve stayed to the very end, given the inherent momentum these sorts of things have. Plus, there was no obvious internal successor. Strong talent (and probable successors) – such as Hodnett and Phakamani Hadebe, now Eskom CEO – had been mismanaged and lost in recent years. Peter Matlare, the remaining deputy CEO (Hodnett had been the other until he was offered a demotion to run Corporate and Investment Banking and subsequently resigned), has limited banking experience.

Source: Absa Group presentation

Perplexing

The new Absa Group CEO will have to be an outsider. This makes it all the more perplexing. Why was a candidate not identified in 2016 and appointed in 2017?

What ought to have happened is clear. Her successor could’ve been appointed CEO designate for a period of 12 or 18 months. Yes, Ramos has the relationships, experience and skill to negotiate a successful separation from Barclays plc. But a CEO designate would’ve been able to work alongside her, developing the bank’s new strategy and assembling a leadership team of their choosing.

Why is this so painfully obvious in hindsight?

The main problem now is, rather predictably, that Ramos has moulded the new Absa Group in her image. The rebrand, the strategy, and the executive team are all her choices (she’ll tell you there was broad consultation, which there was, but this is Maria’s Absa)

The new CEO will ‘inherit’ all of these choices. What if, for argument’s sake, the new CEO wants someone else to run (read: turnaround) the retail bank?

Some reports have said that the bank’s search for a new CEO has been made more complicated as it needs to find someone who would be willing to implement Ramos’s strategy. This doesn’t make any sense!

Why on earth would an experienced executive take on the toughest job in South African banking, only to be judged on a plan developed by their predecessor!

Sleep-walking

In reality, this will be another wasted year for Absa. It will be sleep-walking for the rest of 2019 under the safe pair of (interim) hands, René van Wyk.

Van Wyk, a non-executive director of Absa since February 2017 and former Registrar of Banks at the South African Reserve Bank, is not likely to make any real decisions – certainly not any strategic ones. The new strategy has been set and the flywheel is in motion.

It is instructive to look at the succession plans of the various South African banks over the last decade or so. Standard Bank initially made a poor choice (co-CEOs) and then made the right choice. FirstRand (and FNB) made obvious choices. Nedbank made the safe choice and has an enviable pipeline of (especially black) talent. Investec made a complicated choice last year, thankfully made less complicated by the decision to unbundle the asset management unit. Capitec Bank, too, made the obvious choice. 

Absa Group made no choice. And that’s why it is in this mess.

* Hilton Tarrant works at YFM. He can still be contacted at hilton@moneyweb.co.za.

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Fully agree that Absa is in a complete muddle. Far too much invested in the person of the CEO and senior appointments made for appearances sake rather than experience. Now the bank is left adrift at a time when customer service levels are dismal. Please no Matlare for CEO. That would be adding insult to injury.

‘’No brilliance is needed in Banking. Nothing but common sense, and in Maria’s case, relatively clean finger nails’’

Methinks, Maria Ramos has moulded Absa in her image (and the ANC’s) – in more ways than one.
She immediately started changing Absa senior management when she took over years ago, like she did at Transnet.

Banking politics became much more important than implementing new systems etc. Absa started bleeding millions of customers as the other Bank’s offerings far outperformed Absa’s.
Very capable senior staff got very frustrated and the best ones left Absa first to join the opposition.

I believe one of the biggest mistakes that she made was the way that Barclays Plc managed to ‘’sell their bad ‘and extremely Africa’’ book to Absa. Barclays Africa just wasn’t prepared to commit any more balance sheet into Africa – they only had ‘’facilities’’ for the big Multi-Nationals (and they are extremely over-banked) in Sub-Saharan and East Africa.

Barclays Africa had no appetite for West Africa and also didn’t establish a network at all. I think Absa has lost its soul after the Barclays left them ‘’licking their wounds’’ and I think Maria Ramos now realises that a ‘’professional banker’’ must be found to put Absa back on the banking track again!

Barclays Plc walked away with the names and relationships of Absa’s biggest and best Corporate clients – that they will no doubt service ex London in future Absa inherited a part of the bad African book and they will become more risk-averse now that they must wear all the risk!

I Can’t remember that transnet was one hell of a succsess story either

Finally somebody actually broaches the topic. David Hodnett could have taken ABSA to great places, David Hodnett was the right candidate for this job, he had the skill, both people and technical, to make it happen. What he was not was someone who would do the Ramos bidding on a whim. Arrie Rautenbach, a real one trick, one dimensional pony would do the Ramos bidding at the drop of a hat, and wanted the RBB piece which Hodnett ran under the capable auspices off Marius De la Rey and Jan Magonwa. Rautenbach has a habit if worming his way around the system based on back scratching and allegiances to board members and stakeholders, he has had a and largely unspectacular career with the pinnacle being the Edcon financial services nonsense deal that he saddled Absa with. This chap is an absolute lackey and after Hodnett , Magonwa and the talented De la Rey left got rid off or sidelined all the talent of any significance sending people out of the organization or into marginal roles to be replaced by his hand selected combination of “Palookas (Tshiwela Mhlanthla, Aupa Manyetsi, Faisal Mkhize, Bongiwe Gangeni,Karen Mathebula who must receive special mention as the HR stooge who enforced poor practices in dealing with staff during the latest round of affectations, someone should go back and interview all employees impacted since March 2018, now their you would find a serious breach of ethics and governance if that process was actually audited. Punki Modise, who ran the transactional business into the ground in the retail bank, but is willing to perform at Rautenbach’s beck and call et al and “cronies” Cowyk fox, Carel Gronum, Geoff Lee)……..,the long and short is that Rautenbach and team Palooka Cronies need to go…….Absa’s heart is Retail and Business banking, to undo the damage that team palooka cronies is causing will take forever……if you have money to burn don’t place it in this stock, where concern for staff and customers has gone out the window to be replaced with a Facebook like system where executives are “forced” to make comments on a daily basis…..team palooka cronies strategy seems to be let’s undermine insult and injure the remaining employees as much as we can ….in the hope of committing them to drive growth….all the stated ambitions here are a pipe dream……maybe some of those board members should get off their backs and talk to the real people that held executive roles and that were impacted in the latest affectations at Absa…….

I have found, that the biggest sin as an employee of Absa is, to take management on if/when you are tasked to sell a structure that you don’t agree with. Absa were selling ‘’off balance sheet’’ – LC (letters of Credit) refinancing products to a range of corporate clients (no names, no pack drill, but …,) for many years.
I was tasked to sell such a product to one of the clients – but after I investigated it, I refused to do it, as it was my view that this should only be a normal ‘’on balance sheet’’ LC – Trade refinancing finance deal. I also highlighted the fact that this product wasn’t properly ‘’mapped and signed off’’, in line with Absa’s ‘’process and procedure’’.
A year of hell followed, as everybody involved in these types of transactions, started turning their backs on me (lots of them were very senior staff). My working conditions became more contentious and strenuous every day. My working relationships with the Diversified Corporate bankers soured – they didn’t want to work with me anymore.

Eventually a ‘’moratorium’’ was placed on these types of transactions, until a proper due diligence was done.
Absa eventually appointed a new Head of Product: Documentary Trade and the LC Refinancing structure were investigated. It was confirmed that various types of operational issues existed and that these products should only be sold as ‘’on balance sheet trade financing ‘’ products.
My very strong stance and strong views were vindicated on April 18, 2013. New facility letters (separate LC and Trade Finance Facilities) will be issued, new LC Refinancing pricing structure will be followed as the fees will be higher and changed, operational changes and requirements will be implemented.

Certain corporate clients were livid due to the fact that they believed that their balance sheet had to be ‘’re-stated’’.

My career in Barclays Africa Group was over – all the long knives came out! Luckily I filed and backed up a plethora of correspondence, in this regard.

Never liked ABSA – NEVER will! This, very well-penned article simply adds fuel to my well-stoked fire in this regard. Good one, Hilton. 🙂

The board has been downright delinquent and should be declared such. To know for years that their ineffectual choice of CEO wanted to (thankfully) go and then sit and do nothing for years? How about the Nedbank succession-remember the number of top candidates when Oom Tom left, Investec( complicated but it works) , even Standard Bank managed to replace JAco MAree.

Out with the Board, declare them delinquent and they go do some community service too-their is a lot better in the markets

I’ll do it. I’ll take 75% of whatever she was getting.

CEO coping strategy comes down to: year1-learn the business, year2-blame issues on previous CEO, year3-retrench staff and sell assets that greatly improves short term profits, year4-dodge the Board and investors as they realise you are not living up to expectations, year5-you should be fine until the end the year if you agree with the Board to leave at the end of year5 without putting up a fight.

Was her appointment needed in the first place, or was it a struggle buddy appointment demanded by the anc with qualifications being of secondary importance?

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