Absa shifts into new era as Ramos retires

Maria Ramos’s decision to step down as Absa CEO, after exactly a decade in the job, marks the end of a tumultuous era for SA’s third-most valuable bank, which now plans to claw back the ground it lost under former parent Barclays plc.

Since Ramos took the helm in March 2009, Absa has been the worst-performing stock within the JSE’s banking index.

While its market capitalisation has tripled to R157.9bn, sector giant FirstRand’s has grown six-fold, while Standard Bank, Nedbank, RMH and newcomer Capitec have all fared better than Absa.

But Ramos, who will leave the industry without a female CEO when she retires at the end of February, has had to steer the company through a unique set of circumstances.

While Barclays’s acquisition of Absa in 2005 was initially hailed as a vote of confidence in SA, the London-headquartered group imposed operational constraints on the SA business that ultimately meant Absa lost its market leadership in home loans and credit cards to its more unencumbered rivals.

Absa’s underperformance on the JSE broadly tracks the relative decline of its loan book, which Barclays restricted in line with its strategy to keep risk-weighted asset growth in check.

Now, with Barclays having sold down its majority stake, Absa is planning a comeback.

The lender, which bought Barclays’s eight African subsidiaries for R18.3bn in 2013 and announced a new strategy in December 2018, is targeting "much more aggressive growth, but within the appropriate risk framework", the group’s chair, Wendy Lucas-Bull, told Business Day on Tuesday.

"We’re hopeful that with those assets behind us, plus ongoing investment in technology, we’ll be able to reclaim a much higher place in the pecking order both here and across the continent," she said.

Lucas-Bull said Ramos’s main achievements included the acquisition of Barclays’s interests in the rest of Africa — a deal that had positioned Absa as "a strong pan-African financial services entity. Acquiring good assets across the continent, as we’ve seen, is quite difficult."

Ramos had also managed a complex separation process from Barclays, which included a "tough" settlement negotiation — particularly since the British bank initially sought to sell its shares in Absa without footing the associated costs.

"There she led very well and settled with a very large figure

in excess of R12bn to cover the costs we would incur in  the separation," said Lucas-Bull. Another R2bn was earmarked for BEE.

FNB Wealth & Investments’s Wayne McCurrie said that given the large-scale restructuring she had to contend with, Ramos "has coped more than adequately".

"When Barclays took over they integrated all of Absa’s systems into their global systems, and all of a sudden they’ve got to separate them, and the amount of work, detail and problems a major bank has trying to do something like that is mind-boggling in the extreme," McCurrie said.

He said it had been "impossible" for management to focus fully on building the business at the same time.

"However, there’s no doubt that Absa has lost out to its competitors," he said.

Lonwabo Maqubela, head of research at Perpetua Investment Managers, said Barclays had restricted Absa from growing

its home-loan book, which had resulted in a sharp decline in customers.

"It certainly was a difficult period to head the organisation, and the sell-down complicated matters," he said.

Numerous changes within the board over the past decade had only made it more difficult, Maqubela said.

Absa’s share price gained 6.1% on the JSE on Tuesday, to R186.28, its highest close since April 2018, and its biggest one-day gain in nearly a year.

The banking index added 1.73% on the day.

hedleyn@businesslive.co.za