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Succession issues raised at Absa AGM

The group is not quite up to dealing with unexpected events.
Little emerged that would encourage shareholders to hope that Absa’s leadership is now on a firmer footing. Image: Waldo Swiegers, Bloomberg

Absa’s annual general meeting turned out to be something of a damp squib last week with not even the remuneration votes garnering much opposition.

In the weeks running up to the meeting there was growing talk of a shareholder backlash against the board because of its handling of former CEO Daniel Mminele’s departure. In April Mminele shocked the banking community when he announced he would be leaving the group at the end of the month.

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Chair Wendy Lucas-Bull was reported to have been involved in near-constant engagements with shareholders during those weeks; a fact that might have helped to ensure the AGM ran smoothly.

It might also have helped that Lucas-Bull, who has been chair since 2013, reminded shareholders early on in the meeting that she would be stepping off the board at the end of the year. Lucas-Bull was appointed chair of Shoprite in November 2020.

Stability issues

But little emerged from the meeting that would have encouraged shareholders to hope that Absa’s leadership was now on a firmer footing.

Even Lucas-Bull’s pending departure will not help much. As shareholder activist advisor Active Shareholder notes in its voting recommendation for the meeting, the average tenure of non-executives on the Absa board is just over three years and only five directors have served for five or more years. One of these five directors retired at the AGM and the second, the chair, retires at the end of the year.

In addition, the acting CEO is not only the fourth in the role in as many years, but has only served at Absa for four years.

Read: Mminele exit: Absa board faces serious questions (Apr 21)

The evident lack of succession planning at both non-executive board level and executive level was raised by Zwelakhe Mnguni, chief investment officer of Benguela Global Fund Managers, who pointed out that the banking group is relying on both an acting CEO and an acting CFO.

“Can you please provide some perspective on why the business was not able to make an immediate appointment of a successor to Mr Mminele especially given that the board had repeatedly stated in the past that succession planning is in place within the group.

“Does the fact that we have both an acting CEO and acting CFO not show that there was inadequate succession planning?”

Lucas-Bull explained, without much conviction, the reason a permanent successor has not been appointed is because Mminele’s departure was unexpected.

Read: How succession should (and should not) be done (May 10)

If the meeting had been in-person and not virtual, Mnguni might have had an opportunity to ask a follow-up question pointing out that the great advantage of succession planning is that it enables the board to deal expeditiously with unexpected events. As it is, Lucas-Bull’s unimpressive response was left hanging.

‘Unexpected’

“The reason for not making an immediate announcement was that in the first instance we were not expecting to have to agree to part ways with Daniel,” Lucas-Bull told the meeting in response to Mnguni’s question. “It wasn’t a planned thing, we exercised best efforts to avoid it, until we reached the conclusion that it was in the best interests of the business to part company.”

The chair also pointed out that it is important to have an appropriate process to consider the permanent appointment.

“We didn’t go out immediately with a permanent appointment because it’s important to demonstrate and go through a proper board process to finalise a permanent successor,” said Lucas-Bull, again overlooking the fact that succession planning would involve the appropriate board process.

Read:

Karpowership contract

On a more encouraging note the country’s fourth largest bank by assets did commit to being cautious in its evaluation of any proposal to fund Turkish company Karpowership’s delivery of the emergency power procurement contract it recently, and controversially, won from government.

Read: SA’s R218bn Karpowership deal faces scrutiny (Jun 3)

“We are not about to give away our reputation on one transaction,” said Absa’s acting CEO Jason Quinn in response to a question from shareholder activism organisation Just Share.

Quinn assured shareholders that Absa has not made any commitment yet and any commitment would be subject to independent legal, technical, environmental, insurance due diligences as well as credit processes.

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Absa is such a useless “bank” full of hypocrites and mediocre people, the good ones either left or got pushed. Its leadership and their so-called “seniors” will do anything in their power to retain their positions and get rid of anyone who dares to threaten them. They hardly get involved in skills transfer since they see Absa as their retirement village. This is why there is never a succession plan in place almost everywhere within that “bank”!

yes, in simple terms it is just called “inhouse fighting” – it all revolves around individuals whilst the shareholder / client importance is much further down the list.

Not only at executive level. The bank is rotten with dead wood, smoke and mirrors, cloaks and daggers and all the other cliche idioms to make it worthy of a corporate soap opera.

Little in the bank is done because it is the right thing to do. Almost everything is done as maneuvering for self-preservation and promotion.

The old guard culture permeates through the Johannesburg and Sandton offices and is adopted by the younger managers who make the same ego-driven decisions that inevitably lead to problems.

Lack of succession planning at Absa is merely a signal from the deep- lack of transformation. It is a noticeable signal because it communicates information that is different from the dominant message that is being communicated by the leadership. The board’s psychodynamic pattern has now developed into a clumsy critic-victim dance in which one board member is critical and the other is at the receiving end of criticism, and therefore becomes a victim. Absa will have no choice but to immerse itself into a depth process which will ensure a transcendent third/catharsis. Hopefully, all these inherent polarity tendencies have triggered an impulse for the group to do proper depth work, given the opportunity and a conducive environment.

should absa decide to finance the “controversially Karpowership – power exercise”, indirectly they finance bankrupt eskom with investors money -even if it is government guaranteed, i would not touch this exercise with a seven foot pole

My personal view-guess is that it seems as though ABSA’s potential strength has turned around and become a weakness as different business units can’t seem to collaborate and one wonders if they are in negative rather than positive competition with one another? They should unify as one team to serve from their poorest to their richest customers alike. There are some wonderful people working at ABSA. I just hope and pray that the bad seeds get pushed out rather than the good seeds. ABSA has so much potential with it’s established footprint in Africa, also thanks to the legacy of Barclays. If they could just get their politics sorted out and choose to be kind rather than nasty to one another and their customers. Why do they have such dramatic CEO turnover issues? Murky waters… I am longing for more transparency and fairness.

I retired from Absa a couple of years ago. Don’t blame the messengers or the so-called veterans – that are preparing for pension – their skills have been transferred a long time ago.
Barclays PLC in my view was very bad news for ABSA and thank goodness they left.

The so-called footprint that was established in Africa was nothing more than Barclays Plc getting rid of their risky African book, in exchange for Absa ”s triple A corporate clients. Moral of the African expansion hopes/plans are a ”chequebook” – you must commit ”balance sheet” – that didn’t happen and selling systems instead, won’t bank you cheques!
Most of Absa’s best Corporate bankers jumped shipped (or were pushed) since aunty Maria’s guard already – the one’s that didn’t jump, were pushed – the pale males were flying out of the system.

Absa methinks lacks a simple pragmatic model for use in these turbulent times and contexts. The process of banking should be the goal to deliver sustainable value and service within a diverse range of client situations, as opposed to just being a bank. I always got the impression that Absa management failed to realize that ”change” is about people and people need to be personal, and hence tend to want personal contact.

My strongest view about Absa , especially after I retired and looked back to the past was that it became addicted to continual ”process changes”, without ever stopping to wonder why the last one didn’t work – a favorite Absa addiction is that of reorganization – a poor budget management or endlessly recycling a pattern of centralization and then decentralization.

Well said and my impression was that Barclays also sucked fantastic dividends out of ABSA (Mittal style) but then selling off the shell.

Absa is too complicated, from their internal management issues from their complicated cheque account fee structures.

Way too complicated to understand those fees and bereacratic processes.
Capitec ate their lunch for free

End of comments.

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