Absa bulks up brains trust

2012-11-17 08:54

Lender stops its three-year trend of losing senior executives by poaching executives from rival bank

After experiencing an exodus of senior executives for three years in a row, top lender Absa Group has looked no further to poach senior staff than at its competitor Standard Bank.

In its quest to unseat Standard Bank as the continent’s number-one lender, Absa has recruited two key Standard Bank executives.

In May, Absa – which is majority owned by British lender Barclays – recruited Kennedy Bungane, who was in charge of Standard Bank’s corporate and investment banking operations in South Africa.

A week ago, Absa hired Craig Bond, who was responsible for Standard Bank’s China operations. Bungane is the chief executive of Barclays Africa while Bond will head retail and business banking in Africa.

Both men have intimate knowledge of Standard Bank’s rise to the top of Africa’s banking summit and played a key role in its success.

At some point, Bond was head of African operations in his decade-long career at Standard Bank.

In an interview with City Press in September, Bungane said he wanted to position Absa/Barclays Africa as the “go-to bank” in Africa and stated his intention to “bring to bear” his more than 20 years of experience in corporate and investment banking to achieve this objective.

But Standard Bank shrugged off the impact of the departures of the executives on its operations while some analysts see it as a blow.

“Standard Bank has depth of talent within the organisation. We believe that we have the right people in the right positions to ensure that we remain competitive, both locally and globally.

“The banking sector in South Africa is fiercely competitive and the battle for customers and talent is ongoing,” said Standard Bank spokesperson Ross Linstrom.

Johann Scholtz, a banking analyst at Afrifocus Securities, said the arrival of Bungane and Bond at Absa will boost investor confidence in Absa stock, which has this year been underperforming its rivals Nedbank, Standard Bank and FirstRand Bank, the owner of retail lender First National Bank and vehicle financier Wesbank.

Scholtz said: “There is a perception in the market that Absa does not have the same management depth as Nedbank, FirstRand and Standard Bank. This (appointment of executives) is positive for investor sentiment for Absa.

“For Standard Bank it is never good to lose talent. There has been a lot of continuous restructuring at Standard Bank in terms of reporting lines,” Scholtz said.

Since Maria Ramos joined Absa in 2009 as group chief executive, the lender has lost no less than 10 senior executives, resulting in a severe loss of experienced staff and institutional memory.

And when Absa took a R623 million hit on its home loans book due to a surge in defaults, resulting in a 6% drop in half-year earnings, some investors said it may have dropped the ball after experiencing too many changes at executive level.

Peter Mushangwe, a banking analyst at Legae Securities, said the poaching of Bungane and Bond will make Absa a stronger competitor to Standard Bank and has created an impression that Absa is hungrier for growth than Standard Bank.

“It gives an impression that Absa is more ambitious than Standard Bank but human capital has always been very fluid in banking,” he said.

Regulators are also watching the raging competition over the limited pool of senior talent.

Deputy registrar of banks Madoda Petros said lenders needed to focus on training and developing skills at senior levels to grow their skills pool.

“Unfortunately within the banking sector there is continuous competition for a limited pool of senior skills . . . it’s a challenge for everybody. Their challenge is what do you do? Unfortunately you can’t dictate who they should employ,” he told City Press.

Bungane and Bond arrived at Absa while it was in the process of merging its African operations with those of Barclays. On
the other hand, Standard Bank is downsizing its exposure to markets outside of Africa.

Last week, it announced it was cutting between 10% and 15% of its approximately 900 staff at its London-based corporate and investment banking (CIB) unit.

The lender is seeking to save about $100 million (R889 million) in its international CIB operations due to weak global financial
markets.

Standard Bank is the largest lender in Africa by assets and has operations in 17 countries compared to Barclays Africa’s 13.

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