No successor for Ramos

ABSA’S FAILURE: SEARCH FOR REPLACEMENT SHOULD HAVE BEGUN IN 2016

To describe the succession plan at Absa as botched would be kind. There isn’t one.

It’s clear that Absa’s board seems to have been blindsided by CEO Maria Ramos’s decision to “retire” at the end of this month. They had ostensibly managed to convince her to stay on at least once before. She wanted to leave in 2016 and had previously communicated to the board her preference for a seven-year tenure. Barclays Plc’s decision, in 2016, to exit Africa practically forced her to stay. This is where matters took an incomprehensible turn.

After persuading Ramos to negotiate the separation from Barclays Plc and steer through its implementation, surely it would have been prudent of the board to commence a search for a new CEO almost immediately?

At that point, it knew the timeline for the separation process (which runs from 2017 to 2020). It was improbable that Ramos would’ve stayed to the very end, given the inherent momentum these sorts of things have.

Plus, there was no obvious internal successor. Strong talent and probable successors, such as former chief financial officer David Hodnett and Phakamani Hadebe, now Eskom CEO, had been mismanaged and lost in recent years.

Peter Matlare, the remaining deputy CEO, (Hodnett had been the other until he was offered a demotion to run corporate and investment banking and subsequently resigned), has limited banking experience.

Perplexing

The new Absa Group CEO will have to be an outsider. This makes it all the more perplexing. Why was a candidate not identified in 2016 and appointed in 2017?

Her successor could have been appointed CEO designate for a period of 12 or 18 months. Yes, Ramos has the relationships, experience and skill to negotiate a successful separation from Barclays Plc. But a CEO designate would have been able to work alongside her, developing the bank’s new strategy and assembling a leadership team of their choosing.

The main problem now is that Ramos has moulded the new Absa Group in her image. The rebrand, the strategy and the executive team are all her choices (there was broad consultation, but this is Maria’s Absa).

The new CEO will ‘inherit’ all of these choices. What if, for argument’s sake, they want someone else to run (read: turnaround) the retail bank?

Some reports have said the bank’s search for a new CEO has been made more complicated as it needs to find someone who would be willing to implement Ramos’ strategy. This doesn’t make any sense. Why on earth would an experienced executive take on the toughest job in SA banking, only to be judged on a plan developed by their predecessor?

CEO already wanted to leave in 2016.

Sleepwalking

In reality, this will be another wasted year for Absa. It will sleepwalk for the rest of 2019 under the safe pair of (interim) hands of Rene van Wyk.

Van Wyk, a nonexecutive director of Absa since February 2017 and former registrar of banks at the Reserve Bank, isn’t likely to make any real decisions – certainly not strategic ones. The new strategy has been set and the flywheel is in motion.

Hilton Tarrant works at YFM