Meet Arrie Rautenbach: Absa’s new CEO

In the end, the Absa Group board opted for the ‘safe’ choice: Arrie Rautenbach, who has been at the bank for practically his entire career.

The ‘default’ choice would’ve surely been Jason Quinn, who had filled the role on an interim basis for the past 343 days.

One gets the sense, though, that despite the bank being caught completely off-guard by the abrupt and disruptive exit of Daniel Mminele last April, there were certainly other candidates (both internal and external) under serious consideration.

Why else would it have taken the board (with exiting chair Wendy Lucas-Bull working alongside chair designate Sello Moloko) 11 months to finalise this appointment?

Absa had to get this selection right. It spent most of 2019 under the leadership of caretaker René van Wyk, followed by 15 months under Mminele (a candidate the board was willing to wait an entire year for!) and the most recent 11 months under the capable hands of its finance director.

That’s an entire three years and one month with instability at the top. For a banking group with 35 000 employees in 15 countries across Africa, this is far less than ideal.

A sprawling full-service bank is a complex thing, particularly one formed through the merger of four disparate banks in the early 1990s.

The culture at a bank the size of Absa – its DNA and way of doing things – takes a long time to change. Under successive efforts by Steve Booysen and Maria Ramos, the bank’s culture shifted.

That’s what a leader of a group the size of this bank is there to do: to set a vision and a strategy and to make sure everyone in the group is consistently aligned with it (sure, there are the constant meetings and committees, but that’s par for the course for a seasoned banker).

A group CEO is not there to influence how the boss of the retail bank runs that business unit, for example.

Is Absa’s culture where the group needs it to be? The jury is out.

As much as Ramos had shaped the bank in her image during her tenure, it is instructive that Rautenbach was responsible for strategy under Ramos. The reality may be a bit more nuanced, with the group’s strategy more an output of his role than his superior’s. (Quinn is more than capable of being CEO, but some questions may rightfully be asked about his ability to galvanise the group around a clear strategy.)

Rautenbach had three core responsibilities as chief risk officer in 2017: risk (very important!), group strategy (as important!) and the separation from Barclays (also!).

At some point in that year, this last responsibility became the ambit of former construction executive Paul O’Flaherty when it became obvious that the divorce from Barclays would require the complex separation of core banking and IT systems.

In 2018 Rautenbach was appointed to lead retail and business banking (RBB) South Africa by Ramos, and by the end of that year he had presented a credible, detailed strategy for the next three to five years.

Here, he was arguably not the obvious choice. Many of the targets looked stupendous in December 2018.

That the most recent metrics (those disclosed by the bank for 2021) match or are close to the 2021 targets following the two-year disruption of Covid-19 is an astonishing achievement.

In retail deposits, it is 10 basis points away from its market share target (21.9% vs 22%) while in advances its share is at the highest level it’s been at in more than five years and close to its target in a constrained economic environment and a post-Covid world (22.2% vs 23%).

The home loan business needed attention and is now firing on all cylinders, as is the propensity for its banking customers to hold multiple products with the bank.

Rautenbach – and his team – managed to turn RBB around. When speaking to him, it is clear that Rautenbach gives clear accountability to the management team in place. This will stand him in good stead in the top job.

Plus, he knows the bank inside out. His relationships inside the group, many of which have been built over decades, are invaluable.

The core RBB team has been his ‘baby’ for the last four years. This unit is key to driving earnings for the group. In 2017, RBB contributed 54% to group headline earnings. Last year, this number was 57%.

He steered the retail (and business) bank through the knock of Covid-19, plus he would’ve had experience, albeit more limited, during the 2008 global financial crisis.

Rautenbach is described by those who know him as “tough” and “fair”.

The career banker is results-driven, yet obviously humble, and speaks regularly about the “team” around him in private and less-private conversations. He’s proved his mettle, and likely never had any aspirations on the top job.

It was, perhaps, a step too far. But for now, Absa needs someone who ‘gets’ Absa.

Parachuting in an outsider may have worked with Ramos but it manifestly didn’t with Mminele. And, with so much riding on this appointment, Absa simply couldn’t make a mistake.

At the age of 56, Rautenbach has perhaps five or so years at the top. If he makes a proper run of this, he’ll be there until retirement. And what’s noticeable is the vast number of diverse candidates running various pillars of the bank, many now with decades of experience.

In future, this kind of decision will likely not be as fraught.

This article first appeared on Moneyweb and was republished with permission. Read the original article here.