NONE FOOLED BY ABSA’S APRIL FOOLS’ JOKE

Banking group Absa has made a big mistake to choose the eve of April Fools’ Day to announce the appointment of its white CEO, Arrie Rautenbach because none of the transformation advocates were deceived by its unpopular decision.

Rather its latest move had prompted the bank’s commitment to transformation to be called into question. The decision not only annoyed its crucial shareholder, Public Investment Corporation, but the Black Management Forum was disturbed by Absa’s move which it regarded as “reversal of transformation”.

In his reaction BMF president, Andile Nomlala says: “Whilst we note the institutional knowledge and experience of Arrie Rautenbach, we note with serious concern the reversal of transformation made by the bank. Both the CEO and financial director roles have been filled with white males and the bank only has one African on its Exco. The bank needs to be deliberate in grooming black professionals for these roles, and when the time has arrived for black people to assume these roles, nothing should stand in the way.”

The BMF would seek a meeting with the Absa board and the CEO to understand further how they reached this point, and what their plans are in driving transformation moving forward.

The new appointment also antagonised many who believe that it’s in fact Absa had been resisting transformation.

Miyelani Mkhabela the founding director and chief executive officer for Antswisa, a transaction advisory based in Johannesburg, says Absa Group was not committed to supporting Africa’s economic development. “For the longest I have known the bank before, during and after Barclays Bank transaction, Absa Bank hasn’t been committed to transformation in South Africa and they will fail to become an African leading  bank. Transformation is expected to be the primary focus for all corporations in South Africa but the Board and shareholders of Absa hasn’t prioritized transformation as a core banks strategy,” Mkhabela says.

He was of the view that Absa as an African group, had a chance to exhibit their commitment to transformation after the 2005 Barclays Bank transaction, but their senior black directors that were group operations director and group marketing directors left the bank as the bank continued to treat black people as just employees and nothing else.

“Absa will never be inspired by African people, they’re looking at just banking the market and make maximum profit and nothing can be characterised to be inspired by the people they serve. Then how can Africa be proud of the bank that they don’t see themselves on it?” Mkhabela asks.

The PIC was the first to jump up and down over Rautenbach appointment and asked for a meeting with the Absa board to explain its decision to avoid appointing transformation candidate. It’s set to be bruising boardroom battle at the Absa headquarters.  The public entity assets manager – had more than 5% of Absa under its belt.

In a statement the PIC expressed its “downright disappointment” at the new appointment which it believed was a “missed opportunity for the Absa board to publicly demonstrate commitment to purposefully transform the banking group and to advance diversity, inclusivity, and racial and gender equity, at the most senior levels of organisation.”

The bank had been lambasted for making anti-transformation decisions in the recent past that had caused instability at senior executive level. They cited the departure of its former CEO Daniel Mminele, who quit amidst differences with the Absa board on the implement of the bank’s strategy, something the bank confirmed. Absa was also involved in a bullfight with its axed director Sipho Pityana who challenged the bank for allegedly blocking his appointment as the bank’s chairman. Pityana demands one of the two things – to be reinstated or compensated.

The BMF maintained transformation trajectory of corporate SA is in reverse gear and existing power paradigms are being maintained. “These appointments highlight the existing biases and untransformed organisational culture, which is dominant at the senior and top management levels.

“The bank needs to consider its transformation perspective and how it plans to uphold the spirit of transformation moving into the future. The bank needs to consider how it plans to fund black businesses and procuring from black businesses. This work is critical in driving the transformation agenda,” Nomlala said.

It was also expected that political parties such as the Economic Freedom Fighters and the Radical Economic Transformation within the governing African National Congress to come down hard on Absa. These groups might want to align the Absa appointment with their regular claim that the Ramaphosa administration promotes the white monopoly capital at the expense of black empowerment.

According to Mkhabela, who has massive advisory experience in the banking sector, the Absa Group is one of Africa’s largest undiversified and untransformed financial services group but the future will clearly show that the bank will be unable to manage its clients in the 14 African countries it has a presence. “We believe everyone should have access to the transformative power of financial services to help them plan, dream, and aspire to change their lives for the better.

“The practices of the bank are not aligned with its mission statement and they’re one of the groups that just compiled a good strategy for their market and brand positioning but without full adaptation to transformation blueprints,” Mkhabela says. In his parting shot, Mkhabela says: “The Government Employee Pension Fund and PIC must invest in institutions that have adopted principles of responsible investments and committed to transformation. South Africa has a gap for a bank that will be transformed as these goes deeper to not financing small businesses and charging black people high interest rates as the colour of the skin is a definition of risk as per their credit criterion.”

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