Absa bosses v the rest

Loss of bank’s highly regarded deputy CEO comes at crucial time

● When Barclays Africa, soon to be renamed Absa, goes on the hunt for a new corporate and investment bank CEO, it may have to look outside the company and country to clinch the right talent.

The search will arise from the resignation of deputy CEO David Hodnett this week. Hodnett, who was also responsible for all of the bank’s operations in South Africa, had been offered the position before going on a two-month sabbatical in April.

But some in the banking community interpreted the offer as a demotion and this week investors raised concerns over what the loss of Hodnett, who has been on Barclays Africa’s executive committee for 10 years, would mean for the group.

Jan Meintjes, a portfolio manager at Denker Capital, said Barclays Africa had lost its best-regarded banker in top management.

“Experience on risk, regulation and operations of the bank is extremely important. In addition to this, David knew how all of this fitted into the reported numbers and structures. I am sure that these skills reside in the group at a lower management level with different and very competent people, but having this in one person, who is known and trusted by investors, is a very valuable asset,” Meintjes said.

“It is not clear who in the group would be able to step into the seasoned banker role that he fulfilled for a long time.”

Hodnett’s departure has arrived at a crucial time for the group, which is rolling out its new growth strategy and will relaunch its brand across its local and African operations. “This is a concern for the market, and the group’s succession planning does appear to be much weaker at Absa than, say, at FirstRand or Standard Bank,” Meintjes said.

Standard Bank had the luxury of two seasoned bankers at its helm, with Sim Tshabalala and Ben Kruger as co-CEOs for four years, before Kruger resigned and Tshabalala took over as single CEO in September.

This year the bank appointed Lungisa Fuzile as chief executive of its South African operations. Fuzile, who has 20 years’ experience in the public sector, held a position that Barclays Africa CEO Maria Ramos also once held, that of Treasury director-general.

At FirstRand, CEO Alan Pullinger, who has been with the bank for 20 years, last month succeeded Johan Burger in what was described as a long-term succession plan. Nedbank CEO Mike Brown, is also surrounded by experienced bankers such as Brian Kennedy and Trevor Adams.

In the case of Barclays Africa, having Hodnett’s experience had been important, with Ramos joining the bank in 2009 with limited banking experience, Meintjes said.

Ramos was expected to step down in the next two years, given her long tenure.

Barclays Africa spokesman Songezo Zibi said the board, naturally, would look inside and outside of the bank to replace Ramos when the time came. “Maria came from the outside, so the board can hire anybody. If Maria had a heart attack today, what would they do? They have options, they have to.”

Hodnett’s departure might keep Ramos at the bank for longer than the board might have anticipated and provided it with an opportunity to reassess its planning, said Neelash Hansjee, an equity analyst at Old Mutual Equities.

“The competition is increasing for skilled financial services talent as banks and insurers face more competition from each other as they enter each other’s turf, transitioning to broader financial services organisations.”

With Discovery launching a bank, FNB, owned by FirstRand, offering insurance products, and MTN launching financial services products, it is possible that there may be more aggressive poaching.

FirstRand this year snapped up MMI’s former deputy CEO Mary Vilakazi, who some say might succeed Pullinger as the bank’s first woman CEO. MTN chief financial officer Ralph Mupita was previously CEO at Old Mutual Emerging Markets.

Nonetheless, in appointing Barclays Africa’s new head of CIB, Ramos faces a difficult task. Considering the bank’s panAfrican operations and the sector’s need to transform its top management, she may not rule out a foreign candidate.

Under the group’s new structure, with four core business units, the new head of CIB as well as the CEO of retail and business banking, Arrie Rautenbach; the CEO of wealth, investment management and insurance, Nomkhita Nqweni; and the CEO for the rest of Africa, Peter Matlare, who is also deputy CEO, will report directly to Ramos.

“Taking that layer out does make the business more agile and the slimmer structure has benefits,” said Hansjee.

Not clear who . . . would be able to step into the seasoned banker role

Jan Meintjes Denker Capital portfolio manager