Banks in the black at top — and rising

● Just as the departures of two black bank CEOs have raised concerns about transformation in the sector, a new study has shown that black people account for an ever higher proportion of the industry’s top executives — and that it has a strong pipeline of black professionals rising through the ranks.

For the first time, African middle managers outnumber white middle managers in the banking industry, according to the Banking Association’s transformation report 2020, which also found that black people now make up almost 35% of the bank’s top executives.

Seven of the banks have a majority of black directors at board level, as well as a majority of black executive directors, while 65% of middle managers and 86% of junior managers are black, and the banks have upped their spending on skills development, particularly for black women.

But the report, which covers the period from 2016 to 2019, finds there has been less progress on black economic ownership and on the empowerment financing targeted in the Financial Sector Code, with SA’s weak economy weighing on the banks’ ability to achieve some BEE targets since 2016.

“A lot of progress has been made but it is really hard to transform in a meaningful way when the economy is contracting,” said the association’s MD, Bongiwe Kunene.

The association’s report comes after the unexpected departures of Absa’s first black CEO, Daniel Mminele, and of African Bank’s former CEO, Basani Maluleke, sparked concerns from organisations such as Absip (Association of Black Securities and Investment Professionals) about transformation

Of SA’s big six banks, only two have black CEOs — Fani Titi at Investec and Sim Tshabalala at Standard Bank.

Among smaller banks, Bidvest Bank last year appointed a black woman CEO, Hannah Sadiki, to replace Japie van Niekerk, while African Bank appointed Kennedy Bungane to replace Maluleke.

In a media briefing on Thursday, Kunene declined to comment directly on the Absa CEO issue but said the pipeline of black professionals had increased across all banks and pointed to African Bank’s appointment of Bungane as “representing another wellplaced, qualified, experienced black person”.

“So we will watch this space and see what happens at Absa,” Kunene said.

The banks are set to come under fresh pressure to plan for and report on their transformation efforts in terms of the new Conduct of Financial Institutions Bill, which will require them to submit plans in advance to the Financial Sector Conduct Authority and report on progress.

Kunene said the legislation would help focus the minds of financial institution boards on how to reach their targets, and they should treat this as an opportunity.

The banking association study, by Intellidex, found the sector meeting or exceeding the 25% ownership target on measures such as women’s ownership and black voting rights, which were constant at 28%, including 12.6% attributable to black women.

However, it is falling short on “economic interest”, which has declined since 2016 because many of the empowerment deals concluded in 2005 have matured, with black shareholders cashing out some of their profits once their lock-in period ended.

SA’s banking sector was one of the first sectors of the economy to negotiate a voluntary black economic empowerment charter in 2004, long before the government enacted BEE legislation.