Mminele exit: Absa must answer
MMINELE EXIT: ANNOUNCEMENT OF ‘REFRESHED’ STRATEGY RAISES CONCERN
Working relationship deteriorated to such an extent there was no way forward.
The way Absa group chief executive Daniel Mminele resigned on Tuesday shocked the market. On Friday, Business Report hinted at a disagreement between the former CEO and the board. “Heated talks” last week failed to result in any agreement. Then on Tuesday morning, BusinessLive all but confirmed Mminele’s departure.
The bank was forced to issue a statement at 9am, which confirmed that: “Mminele and the boards [of the group and the bank] are working on a suitable separation arrangement and a further announcement will be published shortly after midday.”
It was clear by then that Mminele’s working relationship with the board had deteriorated to such an extent that neither party could see a way forward.
But how did it get to this point less than 16 months into his tenure? Speculation is rife that Absa Group chair Wendy Lucas-Bull and the board were unhappy with changes Mminele wanted to make to the group’s strategy.
When announcing on Sens just before 1pm that he would step down, the group said it “has become clear to the parties that there is non-alignment on matters of strategy and culture transformation”. The inclusion of these last two words is telling.
Group financial director Jason Quinn will take over as interim CEO with immediate effect, pending South African Reserve Bank approval.
But the problems predate all this – by quite some margin.
The issues started in February 2019 when the board was seemingly blindsided by then Group CEO Maria Ramos’s decision to “retire” at the end of that month.
The problem the group found itself in, rather predictably, was that Ramos had “moulded the new Absa Group in her image”. The “rebrand, the strategy, and the executive team” were “all her choices”. It was clear as day then that the new CEO would “inherit” all these choices.
In a statement announcing his departure, Lucas-Bull references that: “The board was very excited about Daniel’s appointment and the positive role he was going to play at Absa. It is a matter of considerable regret that we reached this position. The parting of ways merely reflects divergent professional views and approaches, and is on a ‘no fault’ basis.”
A number of questions ought to be asked by shareholders:
Why did the chair and the board not accept any responsibility for the clear lack of succession planning following Ramos’s resignation?
Why did it take the crisis created by Ramos’s resignation for the board to refresh its directors’ affairs committee? (Until 2019, one member had been on this committee for more than 10 years!).
Did the board and Mminele agree before his appointment that he would be stuck with what was effectively Ramos’s strategy from years prior?
Did Mminele willingly sign up to a position where he was (seemingly) not able to make fundamental shifts to the group’s strategy?
Why did Mminele announce a “refreshed” strategy – with four “enablers” and four “imperatives” – at the release of the bank’s annual results in March?
Were recent “heated” discussions centred around on this strategy again, even though this refreshed strategy was announced a month ago?
Why did Absa completely lose control over Mminele’s exit?