Africa’s largest fund manager, the Public Investment Corporation (PIC) has expressed its “downright disappointment” with the Absa board’s decision to appoint Arrie Rautenbach as its new CEO.
In a statement released on Friday, the PIC noted that by appointing Rautenbach, Absa missed the opportunity to show its commitment to transform the group and advance diversity, inclusivity and racial and gender equity in the group’s most senior positions.
“The PIC expected that the board would have placed the required focus on transformation in the process to recruit a new CEO,” the PIC says.
“This should be a key business risk for the board, considering the nature and breadth of services Absa provides to South African society.”
The banking giant announced Rautenbach’s appointment in a JSE Sens statement on Tuesday (March 29), making Rautenbach the first internally appointed CEO since 2006.
Prior to his appointment as Absa CEO, Rautenbach – who has 25 years’ worth of experience in the banking sector – has served the group in various positions such as being the group’s chief risk officer and chief executive of retail banking South Africa. Rautenbach also provided executive leadership for the Group Separation Programme and Group Strategy Office.
PIC to meet with Absa
The PIC – which according to Absa’s shareholder information owns a 5.41% stake in the bank – says it has requested an urgent meeting with the bank to discuss its transformation strategy and plan.
“Initiatives to advance transformation in large corporations should expressly be linked to incentive structures of the organisation, with a significant weight accorded to the executive and senior management, to ensure that the requisite commitment and accountability take full effect in practice,” the PIC notes.
“Transformation should be a core strategy of the bank, driven from board level. This should incorporate a clear commitment, with clear targets for all levels of management.”
Responding to Moneyweb’s questions via email, Absa says it takes the PIC’s transformation concerns seriously, further adding that as a bank it looks to engage the fund manager on its concerns.
“The PIC is an important stakeholder not only to Absa but to wider society,” Absa says.
“We take their concerns seriously and will continue to engage them constructively.”
However, the lender stuck to its decision of appointing Rautenbach as CEO, citing Rautenbach’s track record in business performance and his ability to deliver on group objectives as some of the reasons supporting his appointment.
Absa further allayed any concerns that Rautenbach’s appointment will result in the delay of the bank’s transformation efforts. Further adding that Rautenbach, as well as the board, are fully aligned with the group’s transformation strategy.
“Furthermore, Arrie has a demonstrable track record of appointing diverse teams at the bank (both in terms of race and gender). The team that he most recently assembled in retail and business banking led to the commercial turnaround of the group’s largest business unit,” Absa says.
“Both Arrie and the board are fully aligned on the principle of driving transformation across all levels within the group,” Absa concluded in its statement.