The change of guard at Absa won’t see any change in the South African banking group’s policy on internationalisation. Unlike some its peers, the bank has no designs on international expansion outside of the African continent, considering it to be uneconomical and yielding little returns.
Instead, it prefers to remain fundamentally a homespun operation, focusing instead on expanding its foothold in the retail banking sphere — where it is the dominant player — and growing returns from its African operations while building its corporate and merchant banking franchise.
This much was made clear at a weekend retreat on the Zambian side of the Victoria Falls arranged by Absa to expound its strategy going forward and to enable the media to network with its executive team.
“We don’t have a big appetite for international expansion,” Absa CEO designate Steve Booysen, who succeeds outgoing CEO Nallie Bosman at the end of the month, told journalists.
However, the group will continue with its strategy in Africa of one acquisition a year, he said. One of the countries currently being looked at by the bank for expansion is Angola. Other African countries where it already operates include Namibia, Zimbabwe, Mozambique and Tanzania.
“Retail is the group’s stronghold and we want to expand our footprint and ensure that we stay ahead of the pack in this arena,” Booysen added.
According to Booysen, the group would also like to be regarded as the leader in transformation.
“We want to contribute positively to the South African success story,” he said in reference to the increased focus on black economic empowerment in the country.
In this regard, the group believes its recently announced empowerment deal, which will see it selling off 10% of its shares to an empowerment consortium — Batho Bonke, of which black investment group Mvelaphanda Holdings holds 20% — is something of a trendsetter.
“We believe we’ve got quality partners on board and they’re in it for the long haul,” said Absa finance executive Jacques Schindehutte.
One factor that has been worrying the group is whether Tokyo Sewale’s recent deal with predominantly white-owned Rebserve will compromise Absa’s empowerment credentials. However, Schindehutte said Mvelaphanda has given the assurance that it will remain black-owned, -controlled and -managed in the future.
Another area Absa will be focusing on is the unbanked — an area it believes has huge potential. Currently, only 51% of the estimated 27-million adults in South Africa are banked.
According to Absa executive Zarina Bassa, Absa hopes to enhance its participation in the black market by developing value propositions for the micro-segments in terms of products, services and channels. It also plans to develop special bundled products and other new special products for this sector.
Over the past year, Absa has grown its black customer base by 19%. — I-Net Bridge