Public service is probably the best place for Maria Ramos


Public service is probably the best place for Maria Ramos

By almost every pure banking or market metric, the performance of Absa under her watch was abysmal

Tim Cohen

In the musical The Sound of Music, one of the catchiest tunes had the lyric, “How do you solve a problem like Maria, how do you catch a cloud and pin it down.”
I’m willing to bet a large amount of money that now-former Absa CEO Maria Ramos despises the song, but it’s oddly apposite as she draws a line under a tumultuous decade at the bank because it’s really difficult to judge her term.
I can’t get away from the feeling that she really didn’t have a great run at the bank, and obviously the market agrees since the share price shot up 7% on the announcement of her departure. By almost every pure banking or market metric, the performance of the bank under her watch was abysmal.
Over the past decade, Absa’s share price has doubled, which doesn’t seem too bad except that Nedbank’s and Standard Bank’s share prices are both up 200%, and FirstRand’s is up 400%. More pertinently perhaps, Absa’s price to book is down over the past decade, whereas Standard and Nedbank’s are both up 50% and FirstRand is up 90%. And that’s not even adding Capitec to the list.
The degree to which Absa has fallen behind was stunningly put on display by the bank itself recently in a set of slides which showed that the bank is falling behind in almost every key metric. Its customer base is ageing; Absa has the largest slice of the 56-65 age group, and the smallest slice of the 18-25 age group.
It’s lost its first place in its biggest money maker, home loans. Its private banking unit is massively skewed toward salaried workers rather than the norm of a bias toward business owners. Return on equity has been static; the cost to income has remained high.
When I saw these graphs, I went a bit cold. I’ve interacted with Ramos as a journalist over the years both as Absa CEO and when she was in government, and I found her somewhat guarded and closed, but absolutely straight as a die. From what I could see, she has impeccable integrity, she’s smart, and her dedication to the country and its institutions is beyond question. Frankly, I like her a lot.
These “objective” measures don’t account for the real dilemma that Ramos faced when entering the bank, which demonstrate, among other things, how important culture is in an organisation.
She took over just as Absa was bought by Barclays which complicated the internal organisation of the bank. I don’t agree with the notion being put around that Absa’s underperformance was a consequence of having Barclays as a parent, but it did complicate running the bank, partly because it meant that she was reporting essentially to two boards.
It didn’t help that Absa’s history and customer base was rooted in SA’s rural world. Ramos faced what might be called the DA dilemma of having to attract a new profile of customer without alienating the old customer, but do so from a totally different starting base.
Ramos is also a pathbreaker, being the only woman banking CEO, and it’s hard to understate what that means in the male-dominated world of financial services. She is also, frankly, not that easy to work with.
But there is something else too. I have always thought that Ramos was an excellent national treasury director general, and a fabulous CEO of Transnet, especially knowing what came after her. So why was she so good at these jobs and so indifferent at the bank?
My blind guess is that the public service plays to her strengths of conceptual clarity and caution, whereas banking is really a game of confidence. After the financial crisis, the new normal was to be extraordinarily circumspect and prudent, and this presumably was the sacred motto of the Barclays crew. In banking, if you underdo the caution, you go bankrupt. But if you overdo the caution, you lose market share.
It didn’t help that, at the time, Capitec was mopping up first-time bankers at a furious rate and all the other banks were putting more muscle into their high-end customers. Absa got a little caught in this vice. Did Ramos misjudge this situation? Probably a bit, but less so than the numbers suggest.
And by the way, if we are counting, Absa’s share price increase over the past decade is double that of Barclays.

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