While Standard Bank and Nedbank have released their midyear results, Absa is expected to release a muted performance on Monday morning. The question, though, is whether its embattled group CEO Arrie Rautenbach will last long in the position after the release of the results.
Rautenbach has been under siege after his botched attempt at demoting or firing Savior Chibiya, the bank’s chief executive of African operations, despite the latter’s relatively good performance while taking no action against senior executives who previously underperformed.
The CEO was also under fire from executives who felt he had failed to champion transformation as he had promised. The final straw, however, was a claim that Absa was in a compliance bind with US authorities after payments made to Cowyk Fox, a former chief executive of Everyday Banking, while a US citizen without concomitant tax and social security payments.
What is likely to make Rautenbach’s stay untenable are his competitors’ performances announced last week. Business Times reported on Sunday that Standard Bank’s headline earnings stood at R22bn for the half year to June. Sim Tshabalala’s outfit delivered a return on equity of 18.5%, sustained franchise growth in its banking businesses, and increased the interim dividend by 8% from a year earlier to R7.44 a share.
The senior management team was reported by the Sunday Times to have told Rautenbach it had lost confidence in him
Two weeks ago, the Nedbank Group also reported a good financial performance in what it termed a challenging macroeconomic environment. The bank, whose CEO is former Absa executive Jason Quinn, announced an 8% increase in headline earnings to R7.91bn, a 4% rise in revenue to R35.159bn, and a 12% increase in diluted headline earnings per share to 1,650c.
Absa’s results are expected to be flat. The senior management team was reported by the Sunday Times to have told Rautenbach it had lost confidence in him in an emotionally charged session that saw him reportedly breakdown.
The question is whether the bank’s leadership will keep him, ostensibly hoping he will deliver solid results in the next six months, or if they will cut their losses and let Rautenbach go after the release of the results.
Further, what are the chances the company is so suffused with confidence in Rautenbach that they believe he will repair his relationship with his management team and successfully rally it to achieve a turn around? Quickly. I doubt this.
The CEO hasn’t quite covered himself in glory. The question is whether the brand can withstand some of the heavy knocks it suffered not because of anyone else but the CEO. If these are not the last results from him, many will be surprised. The end appears nigh for Rautenbach.
