Big changes at Absa

Absa plans to restructure its business once again as South Africa’s third-biggest bank by assets, which looks to unlock growth after years of missteps.

Interim CEO Charles Russon said the changes will reduce the bank’s number of units to four from the current five. It will also reintroduce Absa’s South African retail-lending unit and combine it with the private wealth operations.

“Bringing our South African retail business together as a single business is quite a fundamental shift for the organization,” Russon said in an interview on Friday.

“It’s our core DNA of the firm, and we know that it is such a big driver of our share price.”

The shares surged as much as 8.7%, the most since June 2020, in Johannesburg Friday.

The shakeup comes two years after Absa undertook a major restructuring that carved what had been its retail and business banking division into four units.

Combined with the corporate and investment-banking entities, these made up five core focus areas. The revamp, which gets underway next month, will shrink these to four. 

“For the future, we need something different,” Russon said, noting that the goal then had been to improve focus and growth within individual units.

“Ultimately, you end up with artificial segmentation of your franchise, and you land up with a customer being dealt with across multiple business units, which just creates artificial tension.”

Russon was named interim CEO in August, replacing Arrie Rautenbach, who took early retirement just two years into the job.

Shareholder trust took a nosedive as the lender announced three profit warnings within a 16-month period and lost market share to rivals.

“My focus has been absolutely getting on with it, running the place and trying to do everything that is within your power to execute and set the organization up for success for the next phase of growth, whether it’s myself or whether it’s somebody else in this seat,” he said.