Absa Group chair Sello Moloko is in a tough spot as the company searches for a group CEO — again.
A fraught corporate environment makes the bank unattractive to outsiders, while the hunt goes on against the backdrop of a lack of racial representativity. Two prominent insiders are said to have applied for the post: acting group CEO Charles Russon and chief strategy and sustainability officer Punki Modise.
The bank is working with a recruitment agency, and has cast the net wider. Former CEO Daniel Mminele’s departure in 2021 — after 15 months in the job — serves as a cruel reminder of how tough the environment is for outsiders, and the complexities of built-in race dynamics.
Mminele went to Nedbank as chair, navigated the thorny road of hiring a CEO, and poached Jason Quinn, who was Absa’s finance director. This was not without controversy; some said a good internal pipeline was overlooked during the appointment process. However, Mminele and his board colleagues would have considered several factors, including Quinn’s respectability as a banker.
It’s a little tougher for Moloko as everyone in the banking industry is trying to hold on to their talent. That’s probably why Standard Bank announced the appointment of Kenny Fihla as deputy group CEO in August last year, clearly positioning him as the likely successor to Sim Tshabalala. The announcement appeared a bit hurried, suggesting, possibly, that Standard did not want Absa thinking about poaching from them.
It won’t be easy for Moloko and board. In the short term, he is damned — whatever the decision. He might as well get on with it
While race may be one of the backdrops for Absa, it will not precede strategy in importance. Absa is lagging behind its peers, and a new strategy for South Africa and their rest of Africa operations is long overdue. The bank has lost shareholder value in recent months due to its poor commercial performance, as well as corporate governance scandals that led to the early retirement of group CEO Arie Rautenbach.
This situation was clearly due to inadequate oversight at board level, and shareholders should not be spared the blame. Both commercial strategy and racial diversity have become the bank’s Achilles heel. Shareholders need to pay almost equal attention to such matters. Diversity is not an impediment to performance. If anything, it has been shown to be an enabler of improved performance.
A failure to demand better performance led to an environment in which corporate governance failures overshadowed the Rautenbach era. It is a little tricky in Absa’s case — and for other top-tier banks, too — because of the global spread of its shareholding.
Some will wonder about the Public Investment Corporation’s role, with its 5% stake in Absa. But that shareholding is just marginally above that of a global investor like BlackRock, showing that Africa’s biggest manager cannot be the single driver of South Africa-specific issues such as racial representativity, though they make it look like a case of South-Africa-centric internal baseball.
However, even global investors want to pay attention to diversity because its failure quickly leads to loss of value. That has been the Absa story lately.
The Steinhoff fiasco is an example of board oversight failure — one to learn from. Its spectacular financial irregularities raised questions about the lack of care by both board members and shareholders.
It won’t be easy for Moloko and board. In the short term, he is damned — whatever the decision. He might as well get on with it, as time will not magically reveal the perfect candidate for the imperfect conditions. Moloko will probably wish previous board chairs had paid more attention to the succession issue so that he never inherited the difficult situation.
• Mkokeli is lead partner at public affairs consultancy Mkokeli Advisory
For opinion and analysis consideration, email Opinions@timeslive.co.za
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