Absa overhauls executive to diversify management

After facing criticism on the matter.
Image: Bloomberg

Absa Group, South Africa’s third-biggest bank, made sweeping changes to its executive committee to diversify management, part of the finance industry’s push to be more representative of the communities in which it operates.

Punki Modise, 52, will become chief strategy and sustainability officer as of July 1, as Absa looks to increase its focus on environmental, social and governance opportunities. The lender is also breaking up its retail and business-banking division, which has been its biggest driver of revenue.

Read:
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The changes will “create an organisation that is much closer to our customers,” Chief Executive Officer Arrie Rautenbach said in a briefing Thursday morning. “It’s got a very strong commercial performance mindset.”

The bank has faced criticism from investors including Africa’s biggest fund manager about diversity after the unexpected departure of its first Black CEO last year. The subsequent appointment in March of Rautenbach raised further questions about the bank’s commitment.

Companies in South Africa have been under pressure to appoint more Black executives since the end of apartheid in 1994, but have made limited progress. Of the 10 largest local companies by market value, only three currently have Black CEOs in a country where four out of five people are Black, according to data compiled by Bloomberg.

At its annual general meeting earlier this month, Absa conceded it had regressed on diversity and committed to making changes that would demonstrate significant progress within the next two years.

Other executive committee appointments announced on Thursday include: 

  • Faisal Mkhize becomes head of relationship banking
  • Cowyk Fox will head Everyday Banking
  • Geoffrey Lee becomes head of Absa’s product-solutions cluster
  • Saviour Chibiya will be responsible for retail and business banking outside South Africa
  • Thabo Mashaba becomes interim people officer

“If you look at the broader African, Indian and Colored perspective, that jumps to close to 50% off the back of these changes,” Rautenbach said. The term Colored was coined by the apartheid government to refer to those of mixed race or people descended from the indigenous Khoisan people.

The changes to Absa’s structure will primarily affect its retail and business-banking division that Rautenbach headed before his appointment as CEO. The unit is being split into four parts, which combined with the Corporate and Investment Banking business, will make up the bank’s five new core-focus areas.

The management reorganization at Absa comes as the bank expects first-half earnings to rise by more than 20%. The lender said last week its dividend payout ratio is expected to climb to 50% from 30% a year earlier.

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