The revolving door of CEOs at Absa has become more than a corporate spectacle — it’s a glaring symptom of deeper organisational malaise.
The abrupt departure on Monday of Arrie Rautenbach is framed as an early retirement. It’s hard to buy that. He’s been in the job for about two years, hardly a runway for his strategic plans to win back market share to yield results.
His exit came after months of news reports from Sunday Times’ Dineo Faku that alluded to the dissension within his executive team. Murmurs of a shake-up that hinted at the possible reassignment or removal of Saviour Chibiya, whose performance as the head of the bank’s operations elsewhere on the continent has been nothing short of stellar, raised more than a few eyebrows about the bank’s commitment to transformation.
Adding to the drama, Absa found itself ensnared in a media uproar over a potential violation of US tax regulations. The bank’s decision to compensate Cowyk Fox, the former head of its retail unit, who is now a US citizen residing there, raised uncomfortable legal questions.
For shareholders of the R140bn-plus banking group, this CEO churn is likely to worsen Absa’s existing problems. For one thing, every CEO brings their own playbook, meaning frequent changes disrupt the bank’s strategic continuity. As a company that has trailed behind competitors, both operationally and in the stock market, Absa needs steady hands, not a revolving door.
Absa’s return on equity (ROE), a widely used measure of a bank’s operational performance, is the lowest in the sector at 14% — bad enough to make its share price the worst-performing. It has gained a mere 10% over the past five years, lagging far behind gains of between 37% and 47% notched by its three closest rivals.
And with the second-lowest cost-to-income ratio — a measure of how the bank manages costs relative to its income — and weaker profit margins, Absa is left with little ammunition to fend off competition from old rivals and digital newcomers like Discovery Bank, and start slashing prices and enticing consumers with zero fees.
For another, Absa’s 30,000-plus employees thrive in a stable environment with clear leadership. But as Absa’s board led by Sello Moloko begins the search for a seventh CEO in as many years, the comings and goings in the C-suite create anxiety, affecting morale and productivity. Talented executives might think twice about joining or staying in a company that appears to be in perpetual transition.
The board of Absa must own this churn. Transparent succession planning and stability are non-negotiable, much less for a company at the front and centre of SA’s financial stability. What Absa needs is a CEO committed to the long haul. Investors, understandably, seek fresh leadership to rejuvenate the company’s fortunes.
Absa’s churn isn’t just a headline — it’s a red flag. Stability at the top is vital for navigating the complex world of finance.
• Motsoeneng is deputy editor of Business Day.
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