As the CEOs of two of South Africa's biggest financial institutions prepare to step down and other long-serving banking CEOs near their likely retirement age, there is an opportunity for a new guard of banking leaders to step up.
But does this crucial sector have adequate succession plans?
Last month Nedbank announced the retirement of CEO Mike Brown, pending the appointment of a successor and the completion of a handover process. In May Investec Bank South Africa said CEO Richard Wainwright would step down in 2024 and remain on the executive until his planned retirement in 2025.
Stuart Theobald, chair of Intellidex, a research and consulting firm specialising in Africa's capital markets and financial services, said that managing the CEO succession process in a bank is particularly important.
“The reasons range from maintaining the operations of the bank, meeting the expectations of all stakeholders, from shareholders to staff and, importantly, regulators.”
He said several boards are in the position of needing succession plans for CEOs who have had long tenures.
Standard Bank's Sim Tshabalala, FNB's Jacques Celliers and Capitec's Gerrie Fourie are among the longest-serving CEOs in the sector.
Succession planning at banks was thrown into the spotlight when Absa CEO Maria Ramos stepped down in 2019.
“When Ramos stepped down, it was clear that there was not an immediate successor. It was some time before the appointment of Daniel Mminele was announced,” Theobald said.
He held the office for just over year before resigning, “and there was another hiatus during which there was an acting CEO before a permanent appointment was made. Boards will want to avoid that kind of Absa scenario.”
Radebe Sipamla, investment analyst at Mergence Investment Managers, said Mminele had lacked the full backing of senior executives across the bank.
“Effectively it was a coup d'etat where he was pushed out by senior people on the board who were lobbied by senior people from within the organisation because they did not buy into his vision for the business.” Mminele now chairs Nedbank.
Sipamla said the appointment of Arrie Rautenbach as CEO was a step in the right direction. “He knows the business inside and out and has experience running the retail division of Absa, which is the biggest division.”
Capitec's Fourie helped found the bank. “I think there's a bit of concern that when he hands over the baton to the next CEO maybe Capitec loses that entrepreneurial flair, which has driven its disruptive growth,” said Sipamla.
Capitec said it takes succession planning and talent development seriously and continuity of leadership is the key to its long-term sustainability.
“This requires us to identify and strengthen diverse talent pipelines for all leadership roles across the business and aggressively develop the readiness of the talent in the pipeline,” the bank said.
Candidates for the top job at Capitec include Grant Hardy, who was appointed as CFO in June 2022.
At Investec, the appointment of Fani Titi as group CEO after he had served on the board was paying off, Sipamla said.
“You can see it in terms of Investec's share price performance since his appointment. His strategy is delivering, because they have embraced capital scarcity as a philosophy and returned capital to shareholders as part of their strategy in optimising the group’s capital levels and are also derisking their business in the UK.”
Investec South Africa said finding a successor for its CEO Wainwright was under way. “We believe we have deep leadership benches in all our businesses and expect to make an internal appointment.”
It added that “succession planning requires clarity and intentionality to facilitate a smooth transition between executives. We have a series of succession-planning initiatives under way, and these will continue over the next few years.”
Sipamla said FirstRand's succession planning had been seamless given that CEO Alan Pullinger previously headed Rand Merchant Bank and his predecessor, Johan Burger, had been CFO of FirstRand.
“I think they have really got a good internal succession strategy in place,” he said, praising the way the bank promotes executives from within its ranks, and develops leadership internally.
Standard Bank said in the past 30 years it had three smooth CEO transitions — from Mike Vosloo to Jacko Maree in 1999, to Ben Kruger and Tshabalala in 2013 as joint CEOs, and then to Tshabalala continuing as CEO when Kruger retired in 2017.
“In the last five years, transitions at the C-suite level for the group have been largely seamless, with the majority of these being as a result of executives either retiring or exploring alternative career opportunities with the group.”
Front-runners for the CEO post at Standard Bank include Funeka Montjane, CEO of the bank’s personal and private banking division; and Kenny Fihla, CEO of corporate and investment banking (CIB), said Sipamla.
Standard Bank South Africa CEO Lungisa Fuzile, a former director-general of the National Treasury, is also in the running.
Sipamla said Fihla had grown the CIB business and Montjane bolstered the home loans business, which she previously led.
Montjane's name has been mentioned as a possible successor to Tshabalala, “but I think she has a tough portfolio to deliver on. She basically runs a big chunk of the retail business and I think if she is able to turn it around and deliver a solid performance, she will be a star and will be rewarded. If she does not deliver, she might not be a front-runner,” said Siphamla.
He said there is no shortage of talent at the bank. “I think Standard Bank has the dream team if you look at the depth of leadership,” he said.
Sipamla said Nedbank has never had a black CEO. “I think appointing a black CEO would be a good statement on transformation for them,” he said. However, he said Nedbank CFO Mike Davis was a solid candidate for CEO given his intimate knowledge of the bank. Davis has been at Nedbank for 26 years.
Black Business Council CEO Kganki Matabane said last month: “Nedbank is the only bank among the big four that has never had a black group CEO and the impending retirement of Mr Brown presents a perfect opportunity to rectify this anomaly.”
Nedbank, describing its track-record of leadership succession as “strong”, said the board, supported by a global search firm with a strong domestic presence, was in the early stages of a process to choose a successor to Brown. The process “will consider both internal and external candidates”.
Nedbank's executives who could be in the running include group COO Mfundo Nkuhlu, who has been on the executive committee since 2008, Ciko Thomas, MD for retail and business banking, and Terence Sibiya, group managing executive for Nedbank's Africa regions.
Asief Mohamed, chief investment officer at Aeon Investment Management, said given South Africa's highly regulated financial sector, “the Reserve Bank seems to have the final say in the appointment of banking CEOs and directors in the banking and life sectors”.
“Because if a bank or life company goes bankrupt or has liquidity or solvency difficulties it can potentially lead to a systemic financial crisis in South Africa.”
In its annual report released last week the Prudential Authority said while succession planning in bigger banks was largely in line with best practice it found that succession planning for boards presented issues as members retired.
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