Absa Group CEO, Arrie Rautenbach, still sees pockets of growth, despite the rising interest rates.
It makes sense for banks to invest in communities and practically show empathy during tough times, writes Absa Group CEO Arrie Rautenbach.
For centuries, the banking sector has attracted bellicose public reviews from various opinion-makers and ordinary people throughout the world.
These sentiments have tended to be gloomier in the developing world. By and large, banks are perceived as innately against those people who are already struggling due to the legacy of colonialism and – in the instance of South Africa – apartheid, amongst other forms of systematised repression.
These obdurate perceptions stem from banks’ customer as well as societal relations – in other words, how banks are seen to be treating these two groups of stakeholders.
When the American poet, Robert Frost, said: “A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain,” he reinforced a widely-held view. It is important to mention that this criticism is not without merit if one appreciates the centrality of banks in nations’ economic evolution.
When historians describe the evolution of economic powerhouses such as China and the US, amongst others, banks receive a special mention. Banks form the irreplaceable infrastructure for socio-economic development. But banks have to operate at their peak to create the necessary social change. It is therefore understandable why their social position is so heavily contested.
This also means the sector does not have a wide margin for error; our decisions have to “see around the social bend” to ensure alignment and empathy. However, some of the sector’s decisions have caused disastrous consequences for both nations and, in some instances, the whole world. Ordinary citizens were severely impacted by these.
Social creations
The 2008 financial meltdown, for instance, remains a blot on the image of banking. It attests to how decisions by a few executives can shake the foundations of the global economy. At the time, some banks were bailed out by the public sector – an outcome that many would not have countenanced given the studied distance between public and private capital.
Yet, despite the international impact of the crisis, the South African banking system was globally feted for having withstood the perils of the meltdown. Public money was never diverted to save our banks.
The global meltdown served to amplify the fact that banks do not operate in a vacuum. Instead, they are social creations that owe their being to the communities where they operate. In the wake of the crisis, banks have heightened their social rapprochement and major strides continue to be witnessed.
Our customers do not only demand tailored services and solutions, but also banks that intimately align to their values. During the pandemic, which caused unmeasurable heartache for millions around the world, our values as an industry came under severe scrutiny.
Many initiatives were taken by banks globally, and I can attest to the fact that the banking sector in South Africa and across the continent also rose to the occasion. When President Cyril Ramaphosa declared banking an essential service, our industry was brought into sharp focus. Through this step, our sector’s social role was formally acknowledged as an agent for social change.
We heeded the call and, through Banking Association of South Africa, who provides our sector’s national leadership, we launched varying but single-minded relief efforts to cushion our customers during their time of need. This was done to protect livelihoods and the entire economy. Billions of rands were committed to this national relief effort.
Pre-existing initiatives such, as our debt counselling provisions, came in handy as our infrastructure for the relief efforts. These (debt counselling) efforts seek to ameliorate financial hardships that our customers sometimes go through due to market upheavals. We normally enter into tailored arrangements with our customers who are in distress and use various financial interventions to rehabilitate their credit standing.
Citing these is not an effort at chest-beating. Far from it, the sector has benefited from the communities in which we operate and it therefore makes sense to invest in those communities and practically show empathy during tough times. We also acknowledge that we have more areas of improvement that require ongoing attention.
This brings me to the homeward point. At Absa, we have committed ourselves to deliberate and sustainable alignment with the communities in which we operate.
As we strive to be a Pan-African business, we are keenly observing the social requirements across various communities where we have a footprint.
In South Africa, we have already implemented major changes to heighten our concurrence to our national imperatives of transformation. We have announced our intention to implement a new B-BBEE ownership transaction that could constitute up to 8% of our share capital, which is intended to benefit all our staff and investors in the long term. We have also significantly transformed our top leadership in the recent while.
Ours is a relationship business and we believe that we cannot achieve sustainable growth without creating deliberate bonds with the communities in which we operate.
Arrie Rautenbach is CEO of the Absa Group.
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