Having appointed a new CEO, Absa has bought itself relative stability. However, the buck now passes to Kenny Fihla to bring much-needed certainty.
Among several decisions he has to make, Fihla, who is now serving gardening leave, has to work out what to do with Charles Russon, the interim CEO who lost out to him. And he will need to appoint someone to head up Absa’s SA retail operations, which are undergoing a sweeping restructuring.
On the first decision, supposedly after discussion with the board or its chair, Sello Moloko, the Fihla announcement gave some guidance on Russon’s fate — it said he would take on a senior group executive committee role.
In terms of corporate politics, Russon’s future role ought to be decided by the group CEO. In the past, Absa has created ill-defined roles to accommodate executives’ ambitions. These included creating a deputy group CEO role, and a group chief operations officer.
Absa can’t afford to revert to diluted accountability, indecision and conflict — which in SA invariably involve transformation politics — within its executive.
Were Fihla to revive any of those discontinued roles he and Moloko would find it hard to sell them to black lobbyists, politicians and regulators. They would be accused of imposing a white person to babysit a black executive.
In the past, unsuccessful executives have also been paid to go away.
The decision on who becomes SA’s retail CEO is tricky, but it may decide whether Fihla succeeds or fails.
In Fihla, the board clearly decided an outsider was required. This is the third time the bank is attempting such an approach. It did so first with Maria Ramos, and a few years ago it tried again with Daniel Mminele. Mminele inherited a new strategy and structure, and once on board he found little room to manoeuvre.
Last December Absa announced the consolidation of its SA retail units — Everyday Banking (the bulk of retail, including transactional banking, unsecured lending, branches and online banking); Product Solutions (secured lending and insurance); and Private Wealth, which is part of its Relationship Banking unit.
This consolidation was relatively well received by the markets, but its leadership remains in a flux, fuelling uncertainty and anxiety, especially among the thousands of front-line workers affected by the change. Both heads of the two units are still running their respective divisions.
The parallels between Mminele and Fihla are uncanny. Not only were they outsiders, they also came without a retail banking background. There is no doubt that both men are smart, and could run the bank with proper support.
Fihla has strong investment banking credentials. This experience will come in handy as he needs to realise the full potential of Absa’s Corporate & Investment Banking (CIB) division. At R20.5bn, Standard Bank’s CIB earnings dwarf Absa’s R11.7 bn.
In addition, Absa’s Africa Business, a source of leadership controversy under Saviour Chibiya, which helped sink Arrie Rautenbach, Fihla’s predecessor, will need urgent focus.
Imagination and innovation
Besides constant restructurings and leadership changes, Absa desperately lacks imaginative and innovative leaders; the kind that think out of the box and are open to new ideas. At Absa, Fihla is in no-man’s-land. The group remains essentially a retail business despite its many strategy iterations.
Fihla has two options. While he has little choice in the retail consolidation decision, he has a choice of who leads it: he could go outside Absa and buy it; or he could look inside the bank.
The first option will be expensive and less attractive, and offers little prospect of success. Three of the banks that could offer ready-to-run retail talent — Capitec, Nedbank and Standard — are in defensive mode.
It would be bad management and politics for Fihla to poach former colleagues. Capitec and Nedbank have undergone recent leadership changes, and it would also prove hard to entice people from them.
The latest reshuffle at Capitec rules out Basani Maluleke, who now heads Capitec’s retail unit. Fihla’s former colleague at Standard, Lincoln Mali, could be another option, but is unlikely to leave his job at Lesaka for anything other than the top job.
While an option in theory, getting a foreign national over the line with regulators and home affairs would prove a nightmare. That leaves Fihla with the option of looking inside Absa for someone who could shore up the group’s SA retail bank offering.
He can stick with the tried and tested in Geoff Lee, the CEO for Product Solutions, who is in his mid-50s. He is cut from the same cloth as traditional Absa leaders such as Rautenbach and Cowyk Fox. Such a choice would keep the ship steady, but is unlikely to be a new ideas factory.
In Christine Wu, the CEO of Absa’s Everyday Banking, Fihla would find an insider-outsider who speaks AI like a second language. In her mid-40s, she has an international profile with a reputation for innovation, including the launch of Discovery Bank before being headhunted by Absa.
After months deciding on a new CEO and now three months’ gardening leave, one can only imagine the internal business ructions the hiatus will cause. Fihla and the board had better urgently act on these issues, or he risks inheriting a business with divided leadership and diminishing momentum.
• Dludlu is CEO of the Small Business Institute. He worked for Absa in 2010-2012.
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