The Public Investment Corporation (PIC), the biggest fund manager on the African continent, has lambasted Absa for appointing a white male as the bank’s new CEO.
The state-run PIC, which invests on behalf of the Government Employees Pension Fund (GEPF), said in a statement on Friday that it had expressed its “downright disappointment” to the Absa board over its decision to appoint Arrie Rautenbach as CEO. The PIC, which is Absa’s fourth-largest shareholder with a 5.41% stake as of end-2021, added that it was concerned about the apparent instability at the bank’s executive level and said it wanted an urgent meeting with the board to discuss its transformation strategy.
On March 29, Absa named Rautenbach, the former head of its retail and business banking (RBB) unit, as its fourth CEO in three years to end an almost year-long leadership vacuum in the wake of Daniel Mminele’s abrupt exit in April 2021. Mminele, the bank’s first black CEO, left less than 16 months into the role over apparent differences with the board over strategy.
“The PIC believes this is yet another missed opportunity for the Absa board to publicly demonstrate its commitment to purposefully transform the banking group and to advance diversity, inclusivity, and racial and gender equity, at the most senior levels of organisation,” the state-run fund manager said. “The PIC expected that the board would have placed the required focus on transformation in the process to recruit a new CEO. This should be a key business risk for the board, considering the nature and breadth of services Absa provides to SA society.”
Absa has faced scrutiny over its transformation efforts ever since the sudden departure of Mminele, the former deputy governor of the SA Reserve Bank, with the Association of Black Securities and Investment Professionals saying at the time that was concerned about the “clandestine exits” of black executives from the bank.
Some of the high profile black executives that have left Absa in recent years include Nomkhita Nqweni, the former head of its wealth and investment management and insurance unit, who left at the end of 2019, and senior marketing executive Bobby Malabie who departed around the same time.
Bongiwe Gangeni, the former deputy CEO of its RBB unit, was headhunted by Standard Chartered towards the end of 2021, while Songezo Zibi, its former head of group communications, left in August 2021. The bank also suffered the misfortune of losing its deputy CEO Peter Matlare to Covid-19 in March 2021. More recently, it had a rather more controversial parting with former board member Sipho Pityana.
Absa sacked Pityana from its board in November 2021 after he took the Prudential Authority to court, accusing the regulator of financial services firms of blocking him from being considered as Wendy Lucas-Bull’s replacement as chair. Pityana launched legal action against Absa, saying its decision to remove him was unlawful.
Lucas-Bull, who served her last day as chair on Thursday, told Business Day earlier in the week that Absa was committed to transformation. She also argued that the bank was battling to hold on to senior black executives as there was “a war for strong black talent everywhere”.
Lucas-Bull described the untimely exit of Mminele as “a huge disappointment” for her personally as well as for the Absa board and said the legal dispute with Pityana was “very sad”. Nevertheless she cited the example of Punki Modise, who was named interim CEO of Absa’s RBB unit in place of Rautenbach, as one of Absa's transformation success stories.
Absa responded to the PIC statement by saying the state-run fund manager was an important stakeholder both to it and wider society. It also said it took the PIC’s concerns seriously and pledged to engage with the fund manager “constructively”.
“In making the CEO appointment, the board was clear in its reasons, which included Arrie’s track record in business performance and his ability to deliver on group objectives,” Absa said via e-mail. “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.”
Rautenbach’s appointment marks the first time the bank has appointed an insider as its full-time CEO since 2006. As a 25-year veteran of the bank, he has held a number of senior positions and is highly rated in industry circles.
Jason Quinn, who had also been in the running for the role as Absa’s permanent CEO, returns to the role of group financial director after being the bank’s interim head since Mminele’s departure.
“Both Arrie and the board are fully aligned on the principle of driving transformation across all levels within the group,” Absa said.
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