Absa CEO Exits After Reported Squabbles Over Bank’s Strategy

JOHANNESBURG(Capital Markets in Africa) — Absa Group Ltd. Chief Executive Officer Daniel Mminele is leaving South Africa’s third-largest bank following a dispute with other directors over strategy, ending a 16-month tenure just as the lender looks to bounce back from the Covid-19 crisis.

The board and CEO differed on matters of “strategy and culture transformation,” the Johannesburg-based lender said in a statement Tuesday, without giving more detail. Financial Director Jason Quinn will step into the top job on an interim basis, becoming the bank’s fourth leader in less than three years.

“The parting of ways merely reflects divergent professional views and approaches, and is on a “no fault” basis,” Chairman Wendy Lucas-Bull said in a separate statement.

The shares traded 4% lower as of 1:16 p.m. in Johannesburg, valuing the group at 102 billion rand ($7.1 billion).

The schism creates a leadership headache for Absa and comes less than two months after Deputy CEO Peter Matlare died from Covid-19 related complications. Mminele is also the company’s first Black CEO and only the third Black person to take the helm of one of the country’s four biggest banks, and his departure is a setback to the industry’s push to diversify.

“It is indeed regrettable that we should have had to part ways so soon on our journey,” Miminele, 56, said in a statement sent by the bank. “It is, however, important for the CEO to be in complete alignment with the board on critical issues such as strategy and culture.”

Mminele joined in January 2020, after leaving the central bank where he served two five-year terms as deputy governor.

What Bloomberg Intelligence Says:CEO Daniel Mminele’s imminent departure is a blow to Absa, coming just as momentum was returning, with lending up 2% (corporate) to 4% (retail) in its core South African operations. Rationale for the exit — not yet confirmed — may focus on group strategy after expansion plans in the higher-growth sub-Saharan region were delayed by the pandemic. — Philip Richards, BI banking analyst.

Absa began a strategic revamp in 2018 under long-term CEO Maria Ramosto reclaim market share in its home market alongside a split from former U.K. parent Barclays Plc. Ramos left the following year, with Mminele joining almost 12 months later. The overhaul also saw the bank expand its base in the rest of the African continent across retail, corporate and investment banking operations.

After joining Absa, Mminele began reviewing the bank’s strategy, while contending with the fallout from the Covid-19 pandemic. The company this month closed a $6 billion money-market mutual fund, South Africa’s largest, reviving speculation the bank may look to sell its wider asset-management unit.

Absa is also yet to resume dividends after a regulator-encouraged pause following the start of the pandemic, setting it apart from most of its South African rivals. Headline earnings fell 51% last year, with the biggest impact coming in the form of provisions to manage loans.

Source: Bloomberg Business News