The manner in which Absa Group chief executive Daniel Mminele resigned on Tuesday shocked the market.
On Friday, Business Report hinted at a disagreement between the former CEO and the board. “Heated talks” last week failed to result in any agreement. Then on Tuesday morning, Business Live all but confirmed Mminele’s departure.
The bank was forced to issue a statement at 9am, euphemistically titled Discussions with Group Chief Executive, which confirmed that: “Mminele and the Boards [of the Group and the Bank] are working on a suitable separation arrangement and a further announcement will be published shortly after midday.”
It was clear by then that Mminele’s working relationship with the board had deteriorated to such an extent that neither party could see a way forward.
But how did it get to this point less than 16 months into his tenure?
Speculation is rife that Absa Group chair Wendy Lucas-Bull and the board were unhappy with changes Mminele wanted to make to the group’s strategy.
When announcing on Sens just before 1pm that he would step down, the group said it “has become clear to the parties that there is non-alignment on matters of strategy and culture transformation”. The inclusion of these last two words is telling.
Group FD Jason Quinn will take over as interim CEO with immediate effect, pending South African Reserve Bank approval.
But the problems predate all this – by quite some margin.
The issues started in February 2019 when the board was seemingly blindsided by then Group CEO Maria Ramos’s decision to “retire” at the end of that month.
At that time, Moneyweb argued that the absence of a clear succession strategy was a failure of the board.
The problem the group found itself in, rather predictably, was that Ramos had “moulded the new Absa Group in her image”. The “rebrand, the strategy, and the executive team” were “all her choices (she’ll tell you there was broad consultation, which there was, but this is Maria’s Absa)”.
It was clear as day then that the new CEO would ‘inherit’ all of these choices.
“What if, for argument’s sake, the new CEO wanted someone else to run (read: turn around) the retail bank? Why on earth would an experienced executive take the toughest job in South African banking, only to be judged on a plan developed by their predecessor?!”
And so the bank then found itself with a convoluted ‘solution’ where non-executive director René van Wyk was asked to take over as interim CEO from March 2019 to January 2020.
This meant the group simply drifted along for a year, with Van Wyk unable and unwilling to make any major changes.
The board clearly wanted Mminele as CEO, despite a number of other credible candidates for the role. Evidence of this was that it was prepared to wait for his six-month cool-off period following his departure from the SA Reserve Bank. That he was the bank and therefore the board’s preferred candidate was evident from the various leaks towards the start of this “gardening leave”.
In a statement announcing his departure, Lucas-Bull references that: “The Board was very excited about Daniel’s appointment and the positive role he was going to play at Absa. It is a matter of considerable regret that we reached this position. The parting of ways merely reflects divergent professional views and approaches, and is on a ‘no fault’ basis.”
Mminele was up to the challenge of leading Absa Group, despite Hilton Tarrant arguing on Moneyweb that he faced an “unenviable task” in the role.
It remains a mystery just why Mnimele, in his mid-50s, took the job to begin with.
Experienced central bankers have many options open to them when moving on, almost all far easier and less stressful than running Absa.
This remains the toughest job in South African banking, made impossible by the fact that any taker inherits a strategy, path, group structure, executive team and brand set by Ramos ahead of her sudden exit.
A number of questions ought to be asked by shareholders:
- Why did the chair and the board not accept any responsibility for the clear lack of succession planning following Ramos’s resignation?
- Why did it take the crisis created by Ramos’s resignation for the board to refresh its Directors’ Affairs Committee? (Until 2019, one member had been on this committee for more than 10 years!)
- Did the board and Mminele agree before his appointment that he would be stuck with what was effectively Ramos’s strategy from years prior?
- Did Mminele willingly sign up to a position where he was (seemingly) not able to make fundamental shifts to the group’s strategy?
- Why did Mminele announce a “refreshed” strategy – with four “enablers” and four “imperatives” – at the release of the bank’s annual results in March?
- Were recent “heated” discussions centred around on this strategy again, even though this refreshed strategy was announced a month ago?
- Given that Lucas-Bull’s term as chair ends on March 31, 2022, why does she seemingly still wield such outsized influence over the long-term direction of the group?
- Given the demands of both roles, why has Lucas-Bull been allowed to join the Shoprite board as chair while still chair of the group?
- Will Lucas-Bull be involved in the search for Mminele’s successor despite her stepping down early next year?
- Why, more than a month since his passing, has Peter Matlare’s role as deputy CEO (in charge of regional/rest of Africa operations) not been filled, even temporarily?
- Why did Absa completely lose control over Mminele’s exit?
- If Jason Quinn is a suitable interim CEO candidate now, why was he not a suitable one in 2019 when Ramos resigned?