Yes Bank's board will meet today to discuss the "future course of action" following the Reserve Bank of India (RBI) decision to not grant an extension to CEO Rana Kapoor.
Yes Bank’s board will meet today to discuss the “future course of action” following the Reserve Bank of India (RBI) decision to not grant an extension to CEO Rana Kapoor. The bank’s board is most likely to appoint a search committee to find a new CEO of the bank after Kapoor vacates corner office on January 31, 2019.
Ahead of the board meeting, the tension was palpable among investors, which led to a sudden fall in shares as much as 9% to a two-year low to Rs 205 in afternoon trades after a 5% surge in the morning deals.
Kapoor, who is the founding CEO of the bank since its inception in 2004, had asked for a three-year extension in his term as MD and CEO until August 31, 2021. However, the RBI refused to grant the extension. The central bank had taken a similar decision in case of Axis Bank’s Shikha Sharma, in which her three-year fourth term did not get the nod from the regulator.
“The Bank has a demonstrated track record of consistent delivery of business and financial outcomes over the last 14 years, since the commencement of its operations in mid-2004, across all critical parameters such as capital adequacy, credit risk, profitability, operating efficiency, growth, etc,” the bank said in a regulatory filing ahead of the meeting.
Market watchers have said that Yes Bank’s stock performance hinges on answers to questions such as what exactly was the discomfort with Kapoor, who will be the new MD, will the RBI allow Kapoor to continue on the board and what will happen to the planned $1 billion qualified institutional placement (QIP) at year-end, among others.
Rana Kapoor was part of the founding team of Yes Bank, along with Ashok Kapur who died in 2008. As a promoter, Kapoor and his family own 10.66% stake in the bank and are the biggest investor in the bank.