Absa Strengthens Position with Announcement of New Leadership

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JIMMY MOYAHA: Let’s discuss the recent developments that came to light this morning. I was on my way to a recording when I noticed Standard Bank’s announcement regarding Kenny Fihla, the Deputy Chief Executive of the Standard Bank Group and CEO of Standard Bank South Africa, who I spoke to just last week—has resigned.

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

I was shocked to learn about his new position.

I’m on the line with Kokkie Kooyman, Director at Denker Capital, to explore this situation. Kokkie, good evening. It’s always a pleasure to chat with you. Were you as taken aback by this news as I was?

KOKKIE KOOYMAN: We’ve been aware that Absa has been actively searching for a CEO since Arrie Rautenbach stepped down about six months ago. We knew they were looking, but didn’t know if they’d appoint Charles Russon, who was acting as interim CEO, or find someone from outside. I must say, this is a surprise.

I honestly didn’t expect them to find someone from other banks, though it does make sense logically.

Standard Bank stands out as they have a strong pool of talent, which led them to recruit Kenny. It’s surprising that they approached him.

He isn’t exactly young—well, that depends on one’s definition of age. At 54, he’s still at a stage in his career where he could serve as CEO for another nine years, which is considerable.

He’s a highly experienced banker, having been at Standard Bank since 2006, and he accumulated significant experience as the CEO of Investment Banking, CEO of Standard Bank Africa, and now Deputy CEO, being prepared to succeed Sim Tshabalala. However, given Sim’s age of 57, there might not have been much room for him to advance.

Looking back, he was a natural choice for someone to approach: ‘Hey, Kenny, would you like to be the CEO of a bank? Here’s your opportunity.’

JIMMY MOYAHA: [Chuckling] I was going to get to that, Kokkie. I intended to delve into the reasoning behind Kenny’s move. Of course, without speaking directly to those involved, it’s challenging to speculate on their motivations. You mentioned an important point.

For someone positioned as a likely successor to the current group CEO, the question arises: Why not just wait it out? Why not assume that, eventually, I will become the CEO, since that has been the public narrative? That seems logical.

Yet, there could be other dynamics at play regarding how long Sim might remain in that role.

KOKKIE KOOYMAN: You summarized that perfectly. Standard Bank has excelled— and FirstRand is also strong in—developing positions for talented executives and rotating them to gain further experience at every level.

However, when you’re the deputy CEO of a group, there’s only one way to move up. If you truly desire to take charge, you must go elsewhere.

In this context, it depends on individual ambition. It must be challenging for Kenny to receive an offer saying, ‘Join us—we need you. There’s plenty of work to do; leverage your expertise and experience gained at Standard Bank to contribute here.’

JIMMY MOYAHA: Kokkie, we also talked about succession planning previously—not during Arrie Rautenbach’s resignation period, but before. You’ve highlighted that Standard Bank and FNB have demonstrated that succession planning is intrinsic to their model. Absa, however, has faced difficulties in this area, changing CEOs multiple times. Is this the stability the bank has been desperately seeking?

KOKKIE KOOYMAN: We’ll see. [Chuckling] Last year, if you recall, FirstRand raised the bar by making 18 appointments when Mary Vilakazi became CEO. When you shift one person, you have to fill that gap.

Now Standard Bank faces a similar issue: Who will replace Kenny?

Perhaps with internal candidates? Unfortunately, Absa hasn’t had that advantage. They’ve lost Arrie, Jason Quinn, and previously Daniel Mminele. Unfortunately, the situation is getting thin.

So Kenny’s challenge is to address this, too.

If I were on Absa’s board, my directive would be to stabilize the current operations—though it’s quite stable already—but to truly move it back on course and enhance the depth of leadership.

Additionally, considering South Africa’s BEE requirements, ensuring advancement for young black individuals or people of color into executive roles is crucial—something Absa has struggled with recently, largely due to its historical ties with Barclays.

During Barclays’ tenure controlling Absa, minimal efforts were made internally for training and development.

The influence from the parent company stifled many initiatives, and they continue to face repercussions from that.

But with his extensive experience, Kenny is well-positioned to implement necessary changes.

JIMMY MOYAHA: Kenny’s near two-decade tenure at Standard Bank is a tremendous asset which they likely wouldn’t want to lose in any circumstance. This certainly presents a favorable situation for Absa, which requires stability and aims to execute these changes. How does Standard Bank respond internally to this? How do they address the fact that one of their former executives is now with a competitor?

KOKKIE KOOYMAN: It’s indeed interesting. I happened to see Sim Tshabalala during the Standard Bank results presentation, and coincidentally, Charles Russon during the Absa Group presentations on Friday. Charles didn’t exhibit any sign of the impending news. I’m uncertain if he was aware.

The significant risk often arises when someone is poached; they might attempt to take staff along from their previous organization.

This poses a considerable risk for Standard Bank. There’s uncertainty if they have agreements in place to prevent such occurrences, at least temporarily. Notably, Kenny is starting with only a two-month garden leave, which is relatively short.

Typically, that period is six to twelve months. This suggests there may have been some negotiation to facilitate his swift commencement at Absa. Regardless, it remains a risk.

Furthermore, Standard Bank has a very disciplined culture. The question remains: will Kenny endeavor to replicate Standard Bank’s culture at Absa? That’s a considerable challenge.

As for Standard Bank, I wouldn’t be overly concerned. They’ve been attentive to all competition constantly. Kenny faces a significant task ahead of him, especially focusing on the retail aspects.

Charles Russon manages a robust Corporate and Investment Banking operation with great success. However, retail has been an area where Absa has lagged. This was one of Arrie’s goals before his departure.

JIMMY MOYAHA: You brought up a pertinent point regarding the short restraint period; I initially expected it to be more extensive given Kenny’s seniority. We’ll have to monitor how this narrative evolves.

As you highlighted, the incoming group CEO of Absa will officially start from June 17, according to the Sens announcement.

We’ll wrap up our conversation here, Kokkie. Thank you for your insights and time. Kokkie Kooyman from Denker Capital joined us to discuss some intriguing corporate changes in South Africa’s banking sector.

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