There is probably no point to relitigating why Sello Moloko led the process of appointing a new group CEO only to vacate his own position as chair of Absa before his recruit arrives. However, the aftermath of the events calls for a serious reflection among Absa’s stakeholders, especially the board and the regulator.
On Wednesday last week, the banking group announced that Moloko, who had been at Absa for just a short time, would leave to concentrate on his personal businesses and community interests, and he would be succeeded by René van Wyk, an Absa lifer.
The decisions were not, in and of themselves, a problem; the problem is what followed next and the poor management of the messaging.
Worryingly, early reports, before the formal shareholder communication, suggested that the banking group couldn’t have two black men at the helm as chair and CEO, respectively. Indeed, this would have been a first in the group’s history. But it is neither illegal nor unprecedented.
Standard Bank has had both positions held by black men and, most recently, the chair has been occupied by a woman, Nonkululeko Nyembezi. The sky hasn’t fallen.
Absa, itself, has tried transformation without worrying about such strange transformation formulations. Maria Ramos, the most recent longest-serving CEO, served briefly under the chairmanship of another woman, Gill Marcus, and, lately, under Wendy Lucas-Bull.
Before the abrupt exit of Daniel Mminele as CEO, the group looked as if it would be headed by him and Sipho Pityana as chair. Once more, transformation had nothing to do with this turn of events.
Strangely, however, Absa, which has appointed Kenny Fihla as its next CEO, has done little to nothing to address the nonsensical, but deeply troubling, race narrative.
The victims here are the thousands of its employees and shareholders.
The workers have been subjected to years of restructurings and leadership instability. Absa is the only bank that has gone through so many CEOs since 2019.
When Ramos left, she was succeeded by Van Wyk, who stepped down from the board as interim CEO while Mminele served his gardening leave.
Mminele was ousted in less than two years. Then Jason Quinn, former CFO, held the fort briefly until Arrie Rautenbach was appointed. His professional demise came last year after a brief, controversial stint.
This newspaper welcomed Fihla’s appointment as bringing the hope that Absa would, at last, end its curse of instability. This was not to be.
In theory, at least, picking Van Wyk, a former banking regulator, should bring a semblance of stability and continuity. In reality, however, it doesn’t.
In fact, the appointment raises disturbing questions. First, without a credible explanation from the group, it sustains the narrative about Absa not being ready for two black people at the helm.
And second, Van Wyk’s appointment is not without its complications. While his banking expertise is not in doubt, as someone who has been a regulator, then on Absa’s board and executive, these factors should raise legitimate questions about his independence.
These are questions that shouldn’t worry Fihla only; they should also worry the Prudential Authority (PA). The Absa dimension, and its unique history of leadership instability, ought to be an added concern.
Unlike peers in, say, mining and manufacturing, chairs of listed financial services companies are expected to spend more time in office and are often discouraged from serving on other companies’ boards. Serving on other boards would be seen as a distraction. Both the PA and proxy institutions frown upon directors who are deemed too stretched.
SA’s financial services industry is littered with examples of unseemly headbutting between CEOs and chairs because of the amount of time they spend together.
Appointing a strong lead independent director might moderate these undue powers and influence of an embedded chair.
A durable solution lies not in a band-aid; it lies in a thoughtful reconfiguration of the board, including a really independent chair and hawkish regulator’s eye.
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