Jason Quinn made a R60m financial sacrifice by stepping down as Absa’s finance chief in late 2023 to take on the role of CEO at rival lender Nedbank, providing evidence that even the most carefully crafted retention strategies can falter.
The board of Absa, led by Sello Moloko, had concocted a retention agreement with Quinn a year earlier, hoping to keep him on the board as part of the transitional arrangements for the then-new CEO Arrie Rautenbach, who also stepped down less than two years into the job.
Quinn, who left in November 2023, bid adieu to R60.1m in deferred short-term awards and long-term incentives at end-December 2023, a princely sum to forfeit and potentially driven by the allure of the title of CEO and accompanying perks at the rival banking giant.
Quinn retained deferred short-term incentive awards worth R6.6m, Absa’s earnings report showed on Tuesday.
His role has been filled by Deon Raju, a 47-year-old, two-decade veteran of the company who was promoted from chief risk officer. The board has yet to fill the void left by Rautenbach, who took early retirement amid speculation his executive team did not support him. Charles Russon became interim CEO, making him Absa’s sixth CEO, acting or permanent, since 2019.
Absa had underperformed rivals both operationally and in the stock market as the leadership instability reverberates across all business lines, leaving employees with shifting priorities and wondering whether their work is aligned with the latest CEO’s vision.
The bank has the lowest return on equity (ROE) — a measure of operational performance — at about 15%. Still, its shares have outpaced rivals in the past six months, gaining 13% amid declines among its top-four rivals and reflecting favourable bets on Russon’s measures so far in his tenure.
In an interview with Business Day shortly after the company issued its earnings report, Russon, who is in the running for the top job, said he was unfazed by the temporary nature of his role as he had agreed with the board on the parameters of his responsibilities.
“What I said is, from my perspective, I need to have a mandate as much as conceivably possible. Obviously what I can’t do is go and make executive-level hires because anybody hiring would want to know their ultimate bosses and I can’t [tell, so] they are probably going to say, ‘well, have [a] chat to me when you know in three months or whatever the case is’,” Russon said.
“So my posture has been that I’m going to try to drive as much as humanly possible in this period. That’s the mantra we [have] run with for the last seven or so months.”
Russon, who describes his leadership style as distributive, has pushed through changes aimed at hunting for “marketing leading” returns with precision, and rolling back Absa’s gung-ho approach to winning back market share lost when it was part of risk-averse Barclays.
“We’re not just pursuing market share gains,” Russon said, putting ROE and headline earnings per share at front and centre of the strategy. He has set an ROE target slightly above 15% for the 2025 fiscal year.
Part of his plan includes a shift towards a more holistic approach to profitability, assessing both the margins on its products and the profitability of the client or the sector the bank is lending to. Russon has also reviewed Absa’s capital allocation strategy, reorientating it to financing deals that bring higher returns.
“We walked away, just in the last five weeks, from a big financing deal because the margins were so tight and we couldn’t see a bigger impact to the franchise from our perspective. We would be just lending money with no broader impact,” he said.
Update: March 11 2025
This story contains comment from Absa’s CEO.
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