CIMB’S succession planning coming into sharp focus

THE second-largest bank in Malaysia by asset value could see a change of leadership this year, but will the new head honcho once again be parachuted in from the outside?

Perhaps it is high time to allow an internal talent who understands the inside story to lead CIMB Group Holdings Bhd, but the decision lies with the government as the major shareholder.

Starbizweek has learnt that Datuk Abdul Rahman Ahmad, the group chief executive officer of CIMB Group, is looking to leave the banking group by the end of this year.

The 55-year-old’s initial three-year contract expired in June 2023 but was extended for another two years to allow Abdul Rahman to oversee the completion of the bank’s Forward23+ strategic plan that runs until end-2024.

The Forward23+ plan was formulated in 2020 under the leadership of Abdul Rahman, who took charge as chief executive on June 10 of the same year.

Forward23+ is a recalibration of CIMB Group’s previous Forward23 strategy that was unveiled during the leadership of Tengku Datuk Seri Zafrul Abdul Aziz and was extended to 2024 due to Covid-19 disruption.

A source tells Starbizweek that Abdul Rahman looks forward to early retirement, although he is also the top choice to lead his former workplace, Permodalan Nasional Bhd (PNB).

“He said he’s very tired and he is also not very keen to go back to PNB,” according to the source.

If Abdul Rahman is indeed stepping down from his position, who will be his successor? Will the new head be sourced internally or someone from an external organisation?

Abdul Rahman himself was an outsider, and in fact, he was not a banker.

In the past, he helmed major entities such as PNB, Ekuiti Nasional Bhd, Malaysian Resources Corp Bhd and Media Prima Bhd.

Right before he was appointed as CIMB Group’s chief executive, he served as Sime Darby Bhd’s chairman.

Abdul Rahman entered CIMB Group as the successor to Tengku Zafrul, who went on to join the Malaysian Cabinet.

Tengku Zafrul, while not a total stranger to CIMB Group, was also parachuted in from the outside.

He had previously served as the chief executive of Maybank Investment Bank for about four years and was brought into CIMB Group in January 2014 to grow the latter’s investment bank business.

In September 2014, he became the acting chief executive and by late 2015, he was appointed as the chief executive officer, following approval from Bank Negara.

It is noteworthy that Tengku Zafrul had briefly served in CIMB Group many years before his re-entry.

In order to steer CIMB Group forward, the next head of the banking group has to be someone who understands the changing industry dynamics and who can respond to the rise of digital banking.

A source says the top candidate suitable for the post is Effendy Shahul Hamid, who has been with the group since 2004.

“What is the use of succession planning if an outsider is brought in to fill a vacancy despite having an equally capable internal talent?” the source said.

Effendy, an electronic engineering graduate, is currently the chief executive officer of CIMB Group’s consumer and digital banking businesses.

In the organisational chart, Effendy sits next to Abdul Rahman.

Since being appointed to the role on Jan 1, 2023, he manages CIMB Group’s consumer banking franchise across the region, including its digital banking initiatives in two markets.

The 50-year-old is also the chairman of TNG Digital Sdn Bhd and a director at CIMB Digital Assets Sdn Bhd

He is also the chairman of CIMB Bank (Vietnam) Ltd and serves as the director of Principal Asset Management Bhd, according to CIMB Group’s website.

In the past, Effendy led the development of CIMB Group’s new and disruptive revenue streams, with a focus on cultivating platform partnerships and strategic investments in platform-based businesses.

He has overseen the banking group’s asset management and investments across both public and private markets in the region.

“CIMB Group is not short of talent,” says the source. Among other possible candidates in the banking group are Novan Amirudin and Chu Kok Wei.

Novan is the chief executive officer of CIMB Investment Bank and has been serving CIMB Group since July 2022. Before that, he was with JP Morgan for over 15 years as the head of equity capital markets for South-east Asia and the head of Malaysian investment banking.

Currently, Novan is also the co-chief executive of CIMB Group’s wholesale banking and is responsible for corporate banking, investment banking and private banking, among others.

Meanwhile, Chu has served CIMB Group for a longer period of time than Effendy and Novan, since 2003, to be exact.

Chu assumed his current role as the co-chief executive officer of CIMB Group’s wholesale banking in June 2022.

Prior to that, he was the head of Treasury and markets with responsibility for CIMB Group’s markets, sales, trading and structuring businesses in interest rates, credit, foreign exchange, commodities, equity and their derivatives.

He is also responsible for fixed-income investments, and the funding and liquidity management operations for CIMB Group.

“Since joining CIMB, Chu has played an active role in the formation of group wide treasury and market businesses which have grown from strength to strength and today is a market leading franchise and a significant contributor to the group,” CIMB Group says in its website.

Whoever the new chief executive officer will be, the person will be entrusted to grow CIMB Group from its current position as the fifth-largest banking group by assets in Asean with over 22 million customers.

The banking group already has its footprint in all 10 Asean countries.

CIMB Group’s venture in Thailand has yet to stage a convincing turnaround and this will be a major area of focus for whoever is taking over the baton from Abdul Rahman.

Thailand is a key market for CIMB Group, considering that it is the fourth-largest market in terms of gross loans disbursed in the region.

Thailand represents about Rm35.3bil of CIMB Group’s total gross loans of Rm431.8bil as of end-september 2023.

The new chief executive also needs to address concerns that CIMB Group’s return on equity (ROE) has reached its peak by laying out a new strategic plan post Forward23+ for further expansion.

In the nine months ended Sept 30, 2023, the banking group’s annualised ROE stood at 10.7% compared with 9.1% a year earlier.

There is also a high chance for the new chief executive officer to oversee further inorganic expansion, especially for CIMB Niaga – the group’s Indonesian arm.

MIDF Research said earlier in a report that CIMB Niaga is considering the establishment of a “bad-debt bank”, which plays into the wider group’s current effort of managing its asset quality.

“CIMB Group’s Malaysian and Thailand segments already use this (bad-debt bank),” said MIDF Research.

Beyond these considerations, CIMB Group will need to better reposition its digital banking services amid the rise in competition from non-traditional virtual banks.

While the idea of digital banking is to cater to the under-banked and untapped markets often overlooked by traditional banks, eventually banks like CIMB Group will see their core areas being chewed away by the emerging digital banks who are likely to be more nimble in terms of cost and operations.

The next chief executive of CIMB Group will have to better handle the rising competition, alongside the typical competition with the traditional banks like Malayan Banking Group, Public Bank Bhd and others.

In other words, whether CIMB Group can successfully ride on the next wave of growth towards the end of the decade will depend on its next chief executive.