Absa share price surges after Rautenbach leaves
Absa's share price made some major gains on Monday after the bank announced chief executive officer Arrie Rautenbach will take an early retirement package, which means he will not stay for the two and a half years that remain on his contract.
The share price took a major surge at 12.30pm and was trading as much as 5.4% higher.
On Tuesday, the share price was 7.82% higher at 8.18am and was trading around R165.58 per share.
In the last seven days, the share price was up by 9.27% but was down by 5.78% over the last year.
Half-year profit loss
The share price surge was surprising as the Absa Group also posted a 5% decline in half-year headline earnings to R10.2 billion.
The company said that its operating expenses rose faster than its revenue, but Absa noted that there was an improvement in its credit loss levels.
The Absa Group posted diluted headline earnings per share of 1,228.4 cents for the six months ended June 30, down from 1,293.1 cents in the corresponding period a year earlier.
Absa said that its operating expenses rose by 8% to R28.3 billion and noted that its revenue grew by a mere 3% to R53.7 billion as net interest income.
New leadership and a lack of representation
Last month, the Sunday Times reported that Rautenbach allegedly "broke down" during a conference with Absa’s senior leaders.
It was reported that during the meeting, a number of Absa executives said they had lost confidence in him and his ability to lead and wanted a black African CEO.
Absa called out the Sunday Times report and said it was a “malicious and sensational distortion” of what really happened at the conference that had around 250 leaders.
When Rautenbach took over the role of CEO, he replaced Daniel Mminele, who stepped down. Mminele was Absa’s first black CEO.
Absa said that Charles Russon would be interim CEO of the Absa Group and Absa Bank effective October 15, 2024, subject to regulatory approval.
Russon will also become an executive director on Absa’s boards. He is currently the head of the group’s corporate and investment banking (CIB) unit.
After news broke that Russon would take the helm, the Black Business Council (BBC) said that it was disappointed that Absa had chosen to appoint another white chief executive as interim CEO.
Kganki Matabane, the Chief Executive Officer of the BBC said it had hoped that the bank would have appointed a black person as its interim CEO instead.
The appointment of Russon demonstrated, in clear terms, that Absa did not have a proper succession strategy or plan that included a pipeline of possible succession candidates, Matabane said.
Matabane called on Absa’s leadership to ensure that the permanent replacement of Rautenbach is not a white male or anyone from the groups that are overrepresented as per the Employment Equity report.
IOL BUSINESS