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Through the looking glass

Absa’s lack of forward-planning laid bare, the deepening saga of Huge’s hostile play for Adapt IT, Bell Equipment disappoints, and speculation around who will take over as Truworths CEO.
It’s time the JSE overhauled its generally sloppy oversight of share repurchases, says the author. Image: Shutterstock

It’s amazing that Absa has managed to hold on to its status as one of the big four banks, given that for the best part of 16 years now it has seemed to be rather rudderless.

No doubt a lot of its employees, shareholders and customers – and presumably the regulators – were hoping Daniel Mminele’s appointment as CEO in January 2020 marked the beginning of a more stable leadership regime.

So much for those hopes.

Read: Mminele exit: Absa board faces serious questions

Previous CEO Maria Ramos, who stepped down in February 2019, had been in the top job for 10 years. But most of this period was too overshadowed by the comings and goings of Barclays to give any sense of stability, and while Barclays was the major shareholder it was difficult to see Ramos as the real boss.

The rather casual way she announced in February 2019 that she was leaving the following month suggests she may also have felt she wasn’t that tied to the bank. That news seemed to stun Absa employees, including the board’s nomination committee, as much as it did the market.

Read: Why doesn’t Absa have a successor to Ramos? (Feb 2019)

As for Barclays, it really did make a mess of its foray into South Africa.

It purchased a 56.4% stake in 2005 and then sold up in 2017. Had it not been for the global financial crisis, which changed the architecture of the world’s global financial structure, things might have been different. But they weren’t.

And so, having spent years seemingly focused on rebranding itself as Barclays Africa Group, in no time at all just as many years were spent rebranding back to Absa.

In 2007 then-Reserve Bank governor Tito Mboweni complained that he did not see the benefits of Barclays’ management of Absa. You have to wonder if that perception ever changed.

Mminele came with an impressive track record from the Reserve Bank. Those who’ve known him longest speak very highly of him, noting that he quit African Merchant Bank in the very early days as soon as he became concerned with some of its practices. Of course whether or not his record and integrity make him a suitable candidate to run a large commercial bank is another thing.

But what has the Absa board been up to all this time?

They should have been ensuring that a pipeline of talent was available, preferably through development of their 40 000-plus employees. Directors, and in particular the chair of Absa, are paid a fortune: it’s time they earned it.

Huge, hostile, controversial

Meanwhile beyond the banking sector, one of the more hostile takeover bids of recent times continues to spark controversy.

Presumably the JSE and other regulatory bodies will be looking closely at the way specialist communication company Huge Group is implementing its unsolicited bid for technology company Adapt IT.

It’s difficult to make out whether Huge has stepped across any regulatory lines or just stretched a lot of them.

Read:
Huge Group sets out just why it’s pursuing Adapt IT
Volaris Group makes all-cash bid for Adapt IT

But at the very least the JSE should ban share repurchasing – general or specific – by a company that has just announced a takeover bid, particularly when it involves a share swap. Indeed, it really is time the JSE overhauled its generally sloppy oversight of share repurchases.

The Financial Sector Conduct Authority seems to be involved in an ongoing investigation into Huge’s hostile play for Adapt IT; whether or not this should be an inevitable aspect of a fractious takeover battle is another thing. And then there’s the video Huge was forced to remove from its website.

But perhaps of greatest concern was last week’s Sens announcement by Adapt IT referring to “certain Central Securities Depository Participants (CSDP)” requesting Adapt IT shareholders to respond to the Huge offer by April 22. That is a full three months before the offer closes. Hopefully the regulators have tracked down these “certain CSDPs” and are taking appropriate action. Section 81 of the Financial Markets Act has much to say about making “false, misleading or deceptive statements, promises and forecasts”.

Bell strategy?

Bell Equipment, the maker of world-class earth-moving equipment, seems to be hoping to flush out its reluctant shareholders with the grim prospect of eternally poor results.

But news that financial 2020 was its worst ever, with possibly more to come, doesn’t seem to have encouraged shareholders to look more favourably on the risible R10 a share offer from controlling shareholder IA Bell; this is understandable given that the company’s net asset value is around R36 a share.

Read: Bell Equipment buyout of minorities and delisting still on the cards

Truworths

In other news, Truworths’ not-so-new chief financial officer Emanuel Cristaudo is likely to be in the running for the CEO position, which will be up for grabs next year when extremely long-serving Michael Mark vacates the seat he has occupied for 31 years.

The move marks the return of Cristaudo (62) to an executive position at the retail group where he was employed between 1997 and 2014 – in the later years as director of customer relations, management and information systems.

Cristaudo was appointed as a non-executive director to the Truworths board last December.

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Brilliant comments on Absa Chairperson-time to earn her royal income.

For absa to parachute in an outsider (without deep retail banking experience) and task him to reinvent the strategy of the bank must be the best set up to fail exercise ever.

But watch them repeat it. Must be some black women out there under the age of 30 willing to give it a go

End of comments.

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