African Bank board needs to do reflection – Absip

The Association of Black Securities and Investment Professionals has broken its silence on the recent abrupt departure of African Bank CEO Kennedy Bungane, saying the bank’s board of directors needs to conduct an introspection when recruiting Bungane’s replacement.

Absip said this in context that there were similarities between the departure of Bungane, who is Absip’s former president, and his predecessor Basani Maluleke.

“The recent resignation of the chief executive officer, Kennedy Bungane, indicates that either the strategic orientation convergence that has prevailed in recent years has come to an end; or the bank’s next phase requires new hands on deck.

“The optics of the transition indicate that the divergence was regarded as material enough for the separation to be facilitated.

“The difficult part for the bank is that it has to embark on a leadership search faster than it would have planned and also ensure that its growth momentum is maintained.

“The fact that this transition mirrors the difficult exit of the previous CEO – Basani Maluleke – requires the board to reflect on what it needs to do differently during its search process. Getting the right leader to manage the next phase of the bank’s journey is the imperative that will define the legacy of the board and its chair – Thabo Dloti,” said Absip’s President Polo Radebe.

Radebe acknowledged that in the highly regulated world of banking, leadership transitions were a matter of delicate and deliberate consideration that binds boards, regulators and executives in a bond of faith and fidelity.

“The high standards of probity expected from bank executives reflect the importance of assuming a fiduciary role that involves custodianship of the deposits and savings of many who entrust a bank with their resources.

“In a country where a poor saving culture prevails and many citizens live on marginal incomes, the need to ensure banks are run by men and women of integrity is even higher.”

In an industry that is dominated by big five banks, she said the banking industry has recently been grappling with how best to implement transformation, while Absip has been advocating for smaller institutions that will increase competition and diversify products being offered to the market.

“In recent years, as the banks have undergone leadership transitions, the need to balance the various factors unique to the South African landscape – like racial and gender transformation, has continuously emerged as the tricky pathway that some banks do better than others.”

“For Absip, the mission of advocating for transformation at its multiple levels enjoins us to continuously engage with boards whenever transitions loom and a process of searching for appropriately qualified executives begins,” she said.

“In the banking landscape, the fate of the smaller and medium-sized banks is of particular interest as we believe that a more diverse market is preferable to an oligopolistic model dominated by a few players.

“As an organisation, Absip understands that some leadership arrangements will work more fluidly than others and when differences in strategic philosophy emerge, it is in the interests of the institution to find an alternative. Within the South African banking sector, institutions like African Bank occupy a unique place in the hearts and minds of South Africans due to their history of thriving through difficult odds.

“Ensuring stability and viability for these institutions is a cause we strongly believe in.

“Over the past few years, as the bank was revived from its curatorship and planning to ultimately pursue a listing, its growth and progress has been closely monitored and appreciated.

“The ability to grow the bank’s assets in a market as competitive as South Africa’s, indicates that the board and the executive team had found a working alchemy that was functional.”

Radebe also touched on the bank’s need to change its ownership model. The bank is owned by a consortium that includes the Reserve Bank (45%), Government Employees Pension Find (22.5%), Kamva Lethu (10%) and rest of the smaller amount of shares are in the hands of the dominant banks.

“The quest to reform its ownership model which currently involves the Reserve Bank and the consortium of other banks, towards a listed entity, remains the fundamental task that provides an opportunity for many citizens to participate in acquiring a stake in a financial institution; and also continue the mission to transform ownership patterns in the financial services sector.

“Our hope is that in the quest for succession, the African Bank board can tackle difficult questions about the future of the institution they have been tasked to govern; and the calibre of leadership required to ensure that the institution thrives and becomes a meaningful role player in the country’s financial ecosystem.”