Absa firmer on new boss announcement

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JIMMY MOYAHA: We move on to the developments that we found out about this morning. I happened to be on my way to a recording this morning when I saw the announcement from Standard Bank that the deputy chief executive of the Standard Bank Group, who happened to be the CEO of Standard Bank South Africa, Kenny Fihla – a man to whom I spoke just last week – had resigned.

Read: Fihla says ‘goodbye Standard Bank, hello Absa’

I was even more surprised when I found out where he went.

I’m joined on the line by the director at Denker Capital, Kokkie Kooyman, to take a look at this and see if we can make sense of it. Kokkie, good evening. Lovely to speak to you, as always. Were you as surprised as I was this morning?

KOKKIE KOOYMAN: We’ve known that Absa has been searching to fill the vacant CEO post [since] Arrie Rautenbach left roughly six months ago. So we knew the search was on and that Charles Russon, who was standing in as interim CEO, had not been appointed. The uncertainty was whether he would be appointed or an outsider – but I must say it is a surprise.

I didn’t actually think they would go and headhunt at other banks, although it’s actually very logical for them to do that.

And when you do that, I suppose Standard Bank stands out, because they’ve got such a deep and full bench that they went and headhunted Kenny. So surprising that they took him.

Also he’s not young. Well [chuckling], that all depends on your definition of age. He’s actually 54, so that’s fairly young in that regard. He could still be there for nine years as a CEO, and that’s fairly long.

But yes, he’s a very seasoned banker and has been with Standard Bank for many years – since 2006, in fact. He got really good experience along the way [as] CEO of the Investment Bank, and CEO of Standard Bank now Africa, as you say. And now Deputy CEO, where he was groomed to take over from Sim Tshabalala.

The problem for him, I suppose, was that Sim is only 57, so Sim in theory could go on for five or six years, and that doesn’t leave him [Kenny] much space.

So in that regard, looking back, he was an obvious target for someone to say: ‘Hey, Kenny, do you want to be CEO of a bank? Here’s your chance.’

JIMMY MOYAHA: [Chuckling] I was going to get to that, Kokkie. I was going to get to some of the rationale behind it. Obviously without speaking to any of the individuals involved it’s very difficult to try and speculate on what some of the driving factors were around that. But one of the ones that you mentioned is quite an important one.

For someone who had been effectively set up to be the successor to the current group CEO, the question obviously becomes: Why not just simply wait it out? Why not sit back and say, look, at some point I will become CEO, because it’s been sort of put out there to the public. That seemed like the logical thing.

But as you said, there could have been other factors at play around the longevity of someone like Sim remaining in that position for the time being.

KOKKIE KOOYMAN: Yes, you summed it up perfectly. I think Standard Bank has done very well – and actually FirstRand is very good at that, in curating positions for talented execs and moving them around quite a bit to gain experience everywhere, and each time get more experience.

But I suppose it gets to a point where, when you are deputy CEO of a group, there’s only one place to go. If you really want the opportunity to actually pull the levers or be in charge, then you’ve got to go to another bank.

In this case I suppose it depends on the individual. It must be very difficult if you’re Kenny; get offered the job [with]: ‘Come across, we need you. There’s a lot of work to be done here. Use the expertise and experience you’ve gained at Standard Bank and come and do it here.’

JIMMY MOYAHA: Kokkie, the other thing that you and I spoke about as well – and it wasn’t around the time of the resignation of Arrie Rautenbach, but prior to that – was about the succession planning. You’ve brought this up now as well, to say that guys like Standard Bank and FNB have proved that succession planning kind of runs within their model. We’ve seen in the past that Absa has struggled [with this] – struggled to have a CEO in place. They’ve changed CEOs on a number of occasions. Is this the stability that the bank has been desperately needing for the longest time?

KOKKIE KOOYMAN: Well, we’ll see. [Chuckling] It’s FirstRand that I think set the bar – was it last year, end of last year – if you recall that. I’m sure you do. I think they made 18 changes in one go when Mary Vilakazi was appointed as CEO of FirstRand. I think I said FirstRand. They made 18 changes throughout the organisation because, if you move one person, you’ve got to replace him or her.

And so Standard Bank has the same problem now. Who do you replace Kenny with?

An insider group? Absa hasn’t had that luxury. Absa has lost Arrie, they’ve lost Jason Quinn. Before that they lost Daniel Mminele. So it is a bit thin.

So I think the challenge for Kenny is to also do that.

If I was on the board Absa, I would say your mandate is obviously to stabilise the ship – well, it’s fairly stable – but to really get it going again in the right direction, really deepen the bench.

And I’m sure in terms of the whole BEE situation in South Africa, you must make sure that you bring through young black or people of colour in executive positions – which Absa has lacked for a while. A lot of this is still due to Barclays.

In that period when Barclays controlled Absa very, very little was done internally on training, on growing.

It was a mother ship that inhibited a lot of work, and I think they are still suffering from that.

But Kenny will be the right guy with all his experience to do the right things.

JIMMY MOYAHA: Speaking of that experience, close to two decades at Standard Bank alone – that is a wealth of experience that even Standard Bank I imagine wouldn’t want to lose in any scenario. Obviously this is a gain for someone like an Absa that has been needing that stability and, as you said, looking to make some of those changes – how does a Standard Bank respond to this from an internal perspective? How do you look at your competitors and say we now have someone that used to work for [you]?

KOKKIE KOOYMAN: Yes. It’s interesting. I happened to see Sim Tshabalala this morning at the Standard Bank results presentation – and coincidentally Charles Russon on Friday as part of the Absa Group presentations. Charles didn’t show that he knew what was coming. I’m not sure if he did.

But your big risk is always when someone gets poached or moves across. That person takes staff and targets staff from the organisation where he or she worked.

I suppose that is a big risk to Standard Bank. I’m not sure if there are any agreements in place to prevent that happening – at least for a period. I see that Kenny is starting with only a two-month period of garden leave, which is very short.

Normally that’s six months to 12 months. So I’m deducing there must have been a give-and-take there to allow him to start at Absa so quickly. That is a risk.

Also, Standard Bank has a very, very disciplined culture. Does Kenny go and try and replicate the Standard Bank culture at Absa? That’s very difficult.

But I think as Standard Bank, I wouldn’t worry more than I have in the past. They worry about all the competition. The whole time. Kenny’s got his work cut out. There’s a lot of work that needs to be done there, especially on the retail side.

Charles Russon is running a very, very good ship on the CIB [Corporate and Investment Banking], the commercial and the corporate bank. So that’s running well.

But on the retail side is where Absa lacked. And that’s, by the way, what Arrie tried to try to get right – and then left.

JIMMY MOYAHA: I’m glad you brought up that interesting restraint period, because I also thought that for someone as senior as Kenny that restraint would’ve been much longer than it was. But we’ll have to wait and see how this story unfolds.

Of course, as you mentioned, the incoming group CEO of Absa will only take effect from the 17th of June, as per the Sens announcement.

We’ll leave the conversation there, Kokkie. Thanks so much for those insights and for the time. Denker Capital director Kokkie Kooyman joined us to take a look at some very interesting corporate changes in the banking world in South Africa.

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