Absa is going to be without a permanent CEO to steer the ship until 2020, leaving SA’s third-largest bank by market value vulnerable in an increasingly competitive environment.
Absa has mapped out an ambitious growth strategy that includes winning back market share at home and building a stronger business elsewhere in Africa, but it is facing fierce competition from old rivals and newly launched digital banks vying for young, tech-savvy banking consumers.
René van Wyk has been running the show in a temporary capacity since March, potentially limiting his ability to push through long-term strategic changes to defend market share from the likes of Discovery Bank, Bank Zero and Tyme Bank, all of which are trying to muscle in on the lucrative market.
Absa was on track to announce a permanent replacement for former CEO Maria Ramos just before its half-year earnings report in August, but chair Wendy Lucas-Bull said at a shareholder meeting that the new CEO would start work only in early 2020.
"Everybody that you are looking at in this market has significant lock-ins in terms of commitments, and then they’ve got cool-off periods that are imposed by the Reserve Bank," Lucas-Bull said.
Absa is the only top-four SA bank yet to join a banking-fees price war that has seen the likes of Nedbank, FirstRand and Standard Bank slash fees or launch zero-fees products to defend the position from more nimble, capital light digital competitors.
Lucas-Bull said the bank was looking at a "very small" pool of individuals as potential CEO.
The the board was looking for someone whose key attributes included extensive knowledge in the financial services industry and recognition in the market.
It was also crucial for the appointee to be well versed in the SA market and its sociopolitical dynamics.
The fact that Absa did not have a new CEO in the pipeline and had to appoint an interim CEO, while going through a major organisational and brand change, exposed the cracks in the organisation’s succession planning.
But Lucas-Bull said this was because Absa was not going through business as usual. It had many balls to juggle; such as the separation from Barclays and rebranding to Absa, and it did not want to divert attention from getting these things done by announcing Ramos’s pending retirement.
"We purposefully didn’t have any discussion internally running in terms of succession until we were ready to go out to market in December.
"Ideally, we would have liked to announce it earlier, but we had too many things running. And we knew we had René available," Lucas-Bull said.
The chair said that keeping Ramos in place to negotiate the divorce settlement with Barclays became more critical than looking for the next Absa leader because the board knew it was going to be a difficult split.
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