African Bank and Standard Bank: A tale of two banks and the perils of succession…

2026-03-23 - 09:50

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. 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. African Bank: Maybe not quite the worst of times, but ... On Friday 6 March, African Bank suddenly announced that its CEO – Kennedy Bungane – had stepped down with immediate effect. 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. Such reasons would have fallen short of all dimensions of plausibility due to the bank’s own prior utterances. Since Bungane’s 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. In the aftermath of its curatorship, the bank ended up with a unique ownership model where the regulator and competitors owned African Bank. The need to preserve the stability of the industry was the premise advanced for this model. Since then, the regulator has been keen to end the entanglement – 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. In between, the bank embarked on a growth strategy that was driven by internal efficiencies and the old albatross of acquisitions. 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. The alternative growth model – simply becoming so attractive to the market that everyone sees you as the first option – 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. The tricky option of acquisitions is a function of availability of good assets and the ability to integrate them into the bigger elephant. Acquisitions African Bank’s acquisitions – which merited a mention in the Bungane resignation alert – include UBank, Grindrod Bank and some Sasfin Bank assets that were scooped up when they became available. 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. In reality, when the Reserve Bank’s Prudential Authority decided to place Ubank under curatorship in 2022, it stated that it was an institution that was simply “unable 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”. Essentially, this was an asset that had its own shortcomings and would require significant work by African Bank to make it all work out. In the Grindrod acquisition, African Bank stated that “Grindrod didn’t 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.” While the Grindrod group’s 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. The acquisition of Sasfin’s 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. African Bank’s acquisition was aimed at strengthening its presence in the business banking market – and, had the fruits of all these endeavours materialised, the bank’s growth trajectory would have been good news for its listing ambitions. 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. 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’s retirement age is looming. Its board – led by Thabo Dloti – 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. Standard Bank: The best of times ... Standard Bank seems to have a unique problem of a leadership cohort so strong no one knows who its next CEO will be. Current Standard Bank Group CEO Sim Tshabalala’s 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. Tshabalala’s recent utterances suggest that transition is not too far away and, when it happens, the bank’s legacy of leadership development will be a case study far beyond the banking sector. 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. If that fails, the contrasts will only get starker and that elusive quest for excellence will mirror the titles of Dickens’s other great novels – Great Expectations continuously mutating into Hard Times. This article was republished from Moneyweb. Read the original here.