Absa: How do you solve a problem like Maria leaving?
There clearly wasn’t an internal succession plan in place to cope with Maria Ramos stepping down now
Absa expects to have an interim CEO for as long as 10 months after Maria Ramos steps down at the end of February, according to group chairperson Wendy Lucas-Bull.
While Ramos’s retirement has been expected for some time, analysts said her swift exit suggests the board was caught unawares and that it did not have a firm succession plan in place.
The lender said on Tuesday that Ramos, who will have led the company for exactly a decade when she departs, would retire in a month’s time, when she turns 60. The bank’s share price rose 6% to R186.28 on Tuesday following the announcement.
René van Wyk, a non-executive director at Absa since February 2017 and a former Registrar of Banks at the Reserve Bank, will take over in an interim capacity.
Lucas-Bell said Absa planned to announce Ramos’s permanent replacement when it publishes interim results in August, and that her successor would likely take over from the start of 2020.
“We’re essentially talking about a one-year interim period,” she said.
Ramos’ decision to step down followed the conclusion of a number of strategic objectives that were triggered by Absa’s separation from its erstwhile parent, Barclays plc.
When Barclays announced that it planned to sell its majority stake in the lender in 2016, Ramos agreed to stay on to negotiate a settlement with its parent, to plan what work needed to be done, and to start the separation process.
“That also triggered a rethink of the strategy in terms of what it means to be a standalone financial institution rather than a 62% subsidiary of Barclays plc, and a rethink of the brand. So we agreed with Maria, that with all of those things hitting us unexpectedly, we absolutely needed continuity of leadership,” Lucas-Bell said.
The process was completed when Absa announced a new strategy in December 2018.
“And the February date was coming up, so the combination of those triggered where we are now,” Lucas-Bell said.
The board, which was in talks with candidates for the role, was looking for a person who would stay in the job for five to seven years, “so obviously they’ve got to be of an age that gives you that runway”.
The replacement should also be “a respected financial services executive”.
Wayne McCurrie of FNB Wealth & Investments said the suddenness of Ramos’s exit suggested that “it wasn’t Absa’s plan for Maria to leave now – but I think she’s just tired, as I would be”, after a gruelling few years managing the separation.
“Appointing an interim CEO shows that this has caught the board a little unawares – there clearly wasn’t an internal succession plan in place to cope with her leaving now,” McCurrie said.
He added that an external appointment would be preferable as “everyone at Absa who’s been there 10 years has been so internally focused on trying to sort out the mess Barclays left them with”.
Lonwabo Maqubela, head of research at Perpetua Investment Managers, agreed that the board was seemingly “caught off guard” by Ramos’ departure.
Maqubela said appointing a CEO with “fresh eyes, with a good local understanding and a steady hand, would be first prize”. The board, which has seen a number of changes in recent years, should also be strengthened, he said.