Business Maverick

ANNUAL REPORT

Prudential Authority flags succession planning in banking sector

Prudential Authority flags succession planning in banking sector
SARB deputy governor and Prudential Authority CEO Fundi Tshazibana. (Photo: Waldo Swiegers / Bloomberg via Getty Images)

Overall talent management and succession planning in the bigger banks is largely in line with statutory and corporate governance best practices, but key challenges remain.

The Prudential Authority has flagged effective succession planning in its annual report released on Tuesday, pointing out that in some cases across the bigger banks, there was insufficient coverage of successors across the boards, executive committees and other key roles, giving rise to key person dependency. In addition, the report notes that in some cases, some of the identified successors were already occupying other senior roles or had been identified as successors for other positions.

Although Nomfundo Tshazibana, the deputy governor of the SA Reserve Bank and CEO of the Prudential Authority, says overall talent management and succession planning in the bigger banks is largely in line with statutory and corporate governance best practices, key challenges remained.

Challenges she highlighted included:

  • In certain cases, there were no “ready now” successors;
  • A shortage of information technology (IT) skills (including cybersecurity and data architects and software engineers);
  • A high turnover of investment banking and risk-related positions;
  • Emigration of talent;
  • The retention of senior executives in African countries where banks have a presence, owing to a shortage of skills in those countries; and
  • Transformation targets below what is required.

Brain drain

The emigration issue echoes the findings of a recent Playroll white paper, The Playroll South Africa Brain Drain 2023, which shows that while most companies considered C-Suite and management tiers as the most vulnerable to emigration, tech-focused businesses perceived the threat at associate level.

The most popular emigration destination last year was the UK, followed by Australia and then Portugal. Stringent entry applications mean that the UK and Australia were most likely to attract highly skilled South Africans, while Portugal’s golden visa (a residency-through-investment programme) was popular among high-net-worth individuals.

The report also reflects that a number of software developers are opting to stay in South Africa, but work remotely for international companies.

Speaking at a panel discussion earlier this month, Elsa Tshatedi, the executive head of HR at Nedbank, said the bank had seen an increase in people emigrating and the numbers were increasing all the time.

“The people emigrating are those we have identified as those with scarce skills in the banking industry,” she said. “They are highly employable in South Africa and elsewhere.”

Less than a month ago, Nedbank revealed that it was on the hunt for a new chief executive, to take over the reins when the current chief executive, Mike Brown, retires. In a voluntary trading update, the bank informed shareholders that it would partner with a “global search firm with a strong domestic presence” to find Brown’s successor.

Nedbank told Daily Maverick that internal and external candidates were being considered and Brown would continue in his role until a successor has been identified, and a handover process has been completed. When it comes to transformation at board level, Nedbank’s board is 64% black and 29% black women. The bank has, however, never had a black CEO at the helm. DM

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