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Charles Dickens penned his seminal introduction to A Tale of Two Cities almost 170 years ago, and this month it resonated with the fate of two banks.<\/p>\n
In a country where the banking sector is defined by extensive regulations and high propensity for profits, and where succession games are scrutinised deeply, the fates of African Bank and Standard Bank represent the great contrasts that Dickens articulated.<\/p>\n
Read:\u00a0Postbank jumps through regulatory hoops to land FSP licence [Mar 2026]<\/p>\n
Maybe not quite the worst of times, but \u2026<\/p>\n
On Friday 6 March, African Bank suddenly announced that its CEO \u2013 Kennedy Bungane \u2013 had stepped down with immediate effect.<\/p>\n
The reasons for his departure remain opaque but the bank spared us the manufactured story that others have gone for in referring to unplanned stepdowns as early retirement or a desire to pursue new endeavours.<\/p>\n
Such reasons would have fallen short of all dimensions of plausibility due to the bank\u2019s own prior utterances. \\<\/p>\n
Since Bungane\u2019s appointment, the dual mission of the bank has been diversification away from the monolithic lending model (which once drove it into the doldrums of curatorship) and embarking on a journey of disentangling itself from the remnants of those dark days.<\/p>\n
In the aftermath of its curatorship, the bank ended up with a unique ownership model where the regulator and competitors owned African Bank.<\/p>\n
The need to preserve the stability of the industry was the premise advanced for this model.<\/p>\n
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Since then, the regulator has been keen to end the entanglement \u2013 and while exit steps have been initiated before, the sweet spot of a deal that appeases current and prospective owners has not yet been found.<\/p>\n
In between, the bank embarked on a growth strategy that was driven by internal efficiencies and the old albatross of acquisitions.<\/p>\n
Read:\u00a0African Bank delays JSE listing [Nov 2024]<\/p>\n
The problem with such institutions is that internal efficiencies can only take you so far in a market whose competitive dynamics often come down to the marginal difference between cost ratios, credit losses and equity returns.<\/p>\n
The alternative growth model \u2013 simply becoming so attractive to the market that everyone sees you as the first option \u2013 is difficult in a market dominated by the geographic profile and pulling power of the old incumbents plus Capitec, and the digital agility of the new kids in the market.<\/p>\n
The tricky option of acquisitions is a function of availability of good assets and the ability to integrate them into the bigger elephant.<\/p>\n
Acquisitions<\/p>\n
African Bank\u2019s acquisitions \u2013 which merited a mention in the Bungane resignation alert \u2013 include UBank, Grindrod Bank and some Sasfin Bank assets that were scooped up when they became available.<\/p>\n
The problem with each of these assets is that very few people can argue that they were at the top of the performance curve when they were acquired.<\/p>\n
In reality, when the Reserve Bank\u2019s Prudential Authority decided to place Ubank under curatorship in 2022, it stated that it was an institution that was simply \u201cunable to meet its minimum capital adequacy ratio and was also unable to timeously raise the additional shareholder funding required to restore its capital requirements due to a lack of a satisfactory action plan and strategy that could be implemented and executed in a short period to address these shortcomings\u201d.<\/p>\n
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Essentially this was an asset that had its own shortcomings and would require significant work by African Bank to make it all work out.<\/p>\n
In the Grindrod acquisition, African Bank stated that \u201cGrindrod didn\u2019t want to inject the capital into the bank to make it grow, and we were looking to fast-track our development in this arena. We have the capital and liquidity to support this thing and let it fly.\u201d<\/p>\n
Read: African Bank to acquire Grindrod Bank in R1.5bn deal<\/p>\n
While the Grindrod group\u2019s motivations for exiting this part of financial services may have been noble, the discount in the price did not indicate an institution whose erstwhile shareholders felt they were losing a unicorn.<\/p>\n
The acquisition of Sasfin\u2019s assets came at the end of a turbulent period for Sasfin where it has suffered sanctions and tax bills emanating from some rogue staff members within its ranks.<\/p>\n
Read\/listen:
African Bank seals R3.2bn deal with Sasfin
African Bank\u2019s expansion boosted by Sasfin deal<\/p>\n
African Bank\u2019s acquisition was aimed at strengthening its presence in the business banking market \u2013 and, had the fruits of all these endeavours materialised, the bank\u2019s growth trajectory would have been good news for its listing ambitions.<\/p>\n
The journey towards ensuring these assets are integrated into the business and contribute to its growth ambitions would turn out to be a mission that was still in progress when Bungane exited.<\/p>\n
In his stead, Zweli Manyathi has stepped in and is expected to steer the bank through its turbulence as it looks for the next CEO as Manyathi\u2019s retirement age is looming.<\/p>\n
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Its board \u2013 led by Thabo Dloti \u2013 has lost another CEO in a short time and has to either reflect on what it keeps getting wrong or take lessons from the other player in the industry: Standard Bank.<\/p>\n
The best of times \u2026<\/p>\n
Standard Bank seems to have a unique problem of a leadership cohort so strong no one knows who its next CEO will be.<\/p>\n
Listen\/read: A hard but exhilarating year \u2013 Standard Bank Group CEO<\/p>\n
Current Standard Bank Group CEO Sim Tshabalala\u2019s tenure has coincided with a deliberate mission of ensuring that enough executives within the bank stand a chance of transitioning into the role when he exits.<\/p>\n
Tshabalala\u2019s recent utterances suggest that transition is not too far away and, when it happens, the bank\u2019s legacy of leadership development will be a case study far beyond the banking sector.<\/p>\n
So while African Bank reflects on the worst of times and its age of turbulence, taking lessons from those living through the best of times and age of plenty like Standard Bank might not be such a bad idea.<\/p>\n
Read: Top eight Standard Bank bosses paid R511m in 2025<\/p>\n
If that fails, the contrasts will only get starker and that elusive quest for excellence will mirror the titles of Dickens\u2019s other great novels \u2013 Great Expectations continuously mutating into Hard Times.<\/p>\n
#tale #banks #perils #succession<\/p>\n","protected":false},"excerpt":{"rendered":"
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