As Absa, South Africa's third largest bank, embarks on a search for a new CEO after Arrie Rautenbach's early retirement, transformation is expected to be the focus of the group's succession plan.
Absa named the head of its corporate and investment bank (CIB), Charles Russon, as interim CEO after Rautenbach stepped down in October following a series of reports by the Sunday Times about corporate governance failures at the bank.
The bank told Business Times that the board is considering both internal and external candidates as part of the CEO appointment process.
“While it is important to expedite the appointment, there is a need to ensure that we appoint the best and most suitable candidate for the role, taking all factors into account. As an organisation, we remain focused on executing our strategy and delivering for our stakeholders and while we go through the process of appointment we continue to do this under the leadership of Charles Russon as interim CEO,” it said.
Russon, 58, joined the bank in 2006 and is said to be a contender for the position.
Absa came under fire in 2022 for appointing Rautenbach to replace Daniel Mminele — its first black CEO, who lasted only 16 months in the role.
Radebe Sipamla, co-portfolio manager at Mergence Investment Managers, said given Russon's proximity to the mandatory retirement age his tenure could be short lived
“An appropriate potential strategy would be for him to be made CEO, then he actively grooms his potential successors who could come from the creation of a deputy CEO or COO role,” he said.
Jacques Celliers, who is responsible for FirstRand's fintech strategy, could also be a strong candidate given his success during his former tenure as FNB CEO, Sipamla said.
“Retail banking is an area where Absa has underperformed [and] Jacques would be able to strategically position it effectively,” he said.
Absa came under fire in 2022 for appointing Rautenbach to replace Daniel Mminele — its first black CEO, who lasted only 16 months in the role.
Sipamla said transformation would need to be a focal point in the succession planning to ensure internal dissent doesn’t resurface as it did in the months leading to Rautenbach's early retirement.
“It’s also in his [Russon's] favour that he would be an internal appointment as he understands the internal culture and politics, which will make his transition seamless compared to an external candidate,” he said.
A source close to the bank said the board invited executives to throw their hats into the ring as part of the CEO selection process.
“Right now, there is a lot of uncertainty. I think the most important thing is for the new CEO to bring stability and revive the bank's culture. The bank does not have a conducive culture. There are quarters talking about transformation; they need to be clear what transformation means and how big is the pool.”
Another source said Punki Modise, Absa's head of strategy was a potential contender. Modise, who has been with the company for 16 years, was previously interim CFO.
Shaakir Salie, research analyst at Aeon Investment Management, said Absa required a leader with strong strategic vision, experience in navigating competitive markets and a proven track record of fostering growth while maintaining operational resilience.
“Russon’s familiarity with Absa’s operations and prior leadership in their corporate & investment banking division make him a credible candidate, but the final decision will hinge on the board’s assessment of his ability to drive long-term success,” Salie said.
Absa said to strengthen its position in a highly competitive market, it is conducting a review of its retail operations in South Africa to better serve its customers and clients.
“We believe that through this review, an integrated ecosystem will enhance service delivery and seamless customer experiences, drive sustainable growth and respond dynamically to evolving customer and client needs,” the bank said.
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