Absa merges retail banking offerings as a building block for growth
Absa Group interim CEO Charles Russon says the bank is combining its three South African retail banking businesses into a single retail bank as part of a building block for its retail banking ambitions.
Absa on Friday announced leadership and operational model changes for its retail banking business.
The group is merging Everyday Banking, the Product Solutions Cluster and Private Wealth Banking segment into a new retail segment known as Personal and Private Banking. It named Christine Wu and Geoffrey Lee, the former CEOs of Everyday Banking and the Product Solutions Cluster respectively, as interim co-CEOs of the newly formed entity.
Relationship Banking will now operate as Business Banking, paving the way for a focused approach in serving SMEs and commercial clients in a targeted sector.
Business Banking will be led by Faisal Mkhize, who headed up Relationship Banking.
The appointments come two weeks before Kenny Fihla, the former Standard Bank deputy CEO, joins Absa as the second black CEO on June 17.
Russon told Business Times that Fihla would make the final appointment of a permanent Personal and Private Banking CEO.
'We all agreed it makes sense to continue with the process. The logic does not change, he (Fihla) can make the final appointment. Clearly it is a key process for him. We are starting the process but we are not constraining him to an outcome that he cannot work with.'
An Absa insider who spoke on condition of anonymity said many employees doubted the rationale of appointing two interim CEOs for the retail business. 'Many of us internally see the reconfiguration as a positive step. But we are sceptical about the appointment of the co-CEOs even though it's on an interim basis. The old retail and business bank had a terrible performance in 2023.'
Russon said the appointment made sense as Wu and Lee were running 95% of the business cluster. 'They are logical people to run it on an interim basis while we run the process in the background of appointing a CEO. The real crux is to appoint the permanent CEO, not the interim CEOs who are leading the business for a period of time.'
He said a week ago that the group had completed the selection process for the cluster's vacancies with no job losses during the process.
'At this stage there are no job losses, we are not doing this to cut costs and remove roles. That was not the motivation. The motivation for this is that we wanted to bring our retail business together to ensure we showed up in the right way for our customers,' he said.
Russon said the move to combine the businesses followed feedback from stakeholders last year including shareholders, regulators, investors and clients who had flagged the effectiveness of the cluster under its previous structure.
'The single item that was flagged and raised was why are you running your retail South African business as three separate businesses? Some were as precise as to say we don't understand it and we cannot invest in you, it is too confusing. As part of the strategy with the board last year as an executive committee we agreed this was a building block that had to be done, and you cannot wait for the permanent CEO of the group. It is something that was obvious and anyone coming in would bring this business unit together. We then communicated it to the market in December last year,' he said.
Absa, which has 12.7-million customers, reported a 10% increase in headline earnings in the year ended December 2024.
Russon said there is still a lot of work to do in the retail segment of the market where there is a lot of disruption.
'I think it is incredibly competitive — not just with banks. You have telcos, you have insurance companies, you've got consumer retailers all playing in and around the financial services space for the retail consumer. This is setting us up in the right way. Ultimately, with the right leader at the end of this process we should be set up for success,' he said.
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