Absa cuts execs to get bank back into shape

• Restructuring to reach branch level • Some managers opted for severance packages

Absa has overhauled its retail and business banking unit, cutting the leadership team in half and handing out voluntary severance packages, as the bank undergoes its most critical strategic shift since its formation in 1991.

Reviving the retail and business bank, which has chronically underperformed, will be essential to improving Absa’s fortunes. The unit, which accounts for more than half of the banking group’s earnings, grew profit just 1% in 2017.

“If we’re going to win back leadership in the retail sector, we’re going to have to do something fundamentally different,” deputy CEO of the retail and business bank Bongiwe Gangeni said on Friday.

Business Day understands Gangeni was promoted ahead of her boss, the former CE of consumer banking, Jan Moganwa, who is one of a number of executives who have opted for voluntary severance packages as part of a retrenchment process.

Brienne van der Walt, previously head of business banking, left on similar terms.

Individuals were given the option to be part of the process or take a voluntary severance package upfront, Gangeni said.

The retail and business bank’s leadership team has been slashed from 26 to 12 in the first round of management cuts since the bank unveiled its new strategy in March and reorganised into four divisions: corporate and investment banking; retail and business banking SA; wealth, investment management and insurance; and rest of Africa.

Four of the 12 positions were still vacant, said Absa spokesman Songezo Zibi. The structural changes to the retail and business bank would go all the way to branch level, Zibi said. It was unclear at this stage whether there would be a reduction in numbers, he said.

“Our business needs to go back to being closer to customers and colleagues,” Gangeni said. “We had created a business that was multilayered … where key decision makers were not

always exposed to what was happening at the coal front.”

The structure had been concentrated around “two or three individuals”, with people in charge of large portfolios “three to four layers down the organisation. If we continued being structured along the lines we were, the likelihood of being able to achieve what we needed to achieve was almost nonexistent,” Gangeni said.

The new structure involved a combination of “tried and tested portfolios”, such as homeloans and vehicle and asset finance, as well as new portfolios such as customer value management, unsecured lending and investments and deposits, said Arrie Rautenbach, CE of retail and business banking.

Among the ambitious targets set by Absa CE Maria Ramos is a doubling of the group’s share of banking revenue from the continent to 12%. Considering that Absa’s corporate and investment bank posted doubledigit profit growth in 2017, accounting for 34% of group earnings, change was needed in the retail and business bank.

But a group calling itself Absa Concerned Employees told Business Day that it was during Rautenbach’s tenure that Absa lost ground to competitors.

Rautenbach headed the retail bank in SA since 2011, barring a recent stint as chief risk officer and head of strategy. The group said Moganwa had been overlooked because he was “seen as a key member of David Hodnett’s team”. The former deputy CEO of Barclays Africa, Hodnett resigned in May after turning down the opportunity to lead the corporate and investment bank.

Absa’s share price jumped 5.35% on Friday to close at R159.99 as banking stocks were lifted by a rally on the JSE and global stock markets. Over five years, however, the stock has risen just 13.22%, relative to a 74.42% gain in the banks index.

Absa will unveil its new brand on July 11, following Barclays plc selling its majority stake, prompting the name change from Barclays Africa back to Absa.