Outgoing Absa CEO Arrie Rautenbach was forced into early retirement because the board has lost confidence in his management style.
On Monday the banking group announced that Rautenbach, who has been with the company for 27 years, would 'cease' to be group CEO and executive director as of October 15, followed by a six-month contractual notice period which will be served as garden leave.
Charles Russon, CEO of its Corporate and Investment Bank, will take over as interim CEO. Absa said his appointment would pave the way for a “smooth transition” while the board searches for a new permanent CEO.
Rautenbach was named CEO in 2022 to replace Daniel Mminele, who quit 16 months into his tenure, after clashes with executives over the bank's strategic direction. At the time, Rautenbach was the CEO of the bank's retail division.
Multiple sources inside and outside Absa told TimesLIVE Premium he was pushed out because the board was, among other things, unhappy with what they perceived as a “top-down” management style rather than a consultative one.
Another insider said there was a trust deficit between the board and the outgoing CEO as they felt he was withholding critical information from them.
The board also felt some of Rautenbach's decisions had undermined the group's reputation, including his plan to demote or fire Saviour Chibiya, CEO of the group’s Africa Regional Operations. This despite the division outperforming, reporting a 27% increase in headline earnings, which translated to a 44% contribution to the bottom line in the 2023 financial results.
It is understood that the board itself intervened to keep Chibiya in his position as they disagreed with the decision to remove him.
The source said the board was unaware that Rautenbach was trying to force Chibiya out and sought answers from Rautenbach after the Sunday Times first reported the story.
A third insider said the board had run out of patience with Rautenbach over the poor performance of Absa's local operations.
TimesLIVE Premium also understands that the relationship with Rautenbach further deteriorated when the board remuneration committee rejected his request to pay Cowyk Fox, former CEO of Everyday Banking, who is now a US citizen, for doing work for Absa while abroad. The remco flagged a potential violation of US tax and social security regulations by paying Fox, which would have put the financial institution at risk.
Issues of transformation were also raised with Rautenbach, especially the slow pace of appointing black people into senior executive roles.
The Black Business Council (BBC) said on Monday it was disappointed that Absa had not appointed a black person to act as interim CEO.
“This demonstrates, in clear terms, that Absa does not have a proper succession strategy and plan that includes a pipeline of possible succession candidates. The BBC calls on the board of Absa to ensure that the permanent replacement of Mr Rautenbach is not a white male or anyone from the groups that are over-represented as per the employment equity report,” said BBC CEO Kganki Matabane.
“The revolving door of white CEOs at Absa is very worrying to the BBC and other progressive institutions that embrace transformation, as Absa is a very important institution in the economy and the lives of South Africans. The BBC urges the Absa board to find a better way of handling succession in a way that does not bring instability to Absa.”
Rautenbach's early retirement comes as Absa continues to perform worse than other big banks such as Standard Bank and Nedbank. The group on Monday reported a 5% decrease in headline earnings to R10.2bn for the first half of 2024 compared with a 4% increase each for Standard Bank and Nedbank which reported headline earnings for the same period of R22bn and R7.91bn respectively.
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