RBL Bank stock closed at ₹87.90, sharply down (22.45 per cent) over the previous close on BSE, amid appointment of a new MD & CEO.
This came even as all 30 stocks comprising S&P BSE Finance Index ended down against the previous close. The BSE Sensex tanked 2.68 per cent (or 1,456.74 points).
The private sector lenderinformed the exchanges on June 11 that the Reserve Bank of India had approved the appointment of R Subramaniakumar as Managing Director & Chief Executive Officer for three years. Subramaniakumar is a former MD & CEO of Indian Overseas Bank
“…A meeting of the Board of Directors will be convened to approve the appointment of R Subramaniakumar as an Additional Director and as the Managing Director & CEO of the Bank and the approval of the shareholders shall be obtained thereafte,” the bank said in its stock exchange filing on Saturday.
The other prominent stocks in the S&P BSE Finance Index that declined on Monday include Centrum (down 8.46 per cent), IIFL (7.08 per cent), Bajaj Finserv (7.02 per cent), Poonawalla Fincorp (7 per cent) and L&T Finance Holdings (6.78 per cent).
Appointment raises more questions than answers: CLSA
On the appointment of an ex-public sector bank chief as MD & CEO of RBL Bank, CLSA, in a report, noted that such appointments at financial institutions have historically been associated with weak asset quality and/or governance structures.
Hence, the CEO appointment raises more questions, including the continuity of the existing leadership at the bank.
“While we believe asset quality does not seem to be a problem, this situation could have a potential weakening impact on liabilities and hence impact the bank’s performance and growth trajectory adversely,” per the report.
June 13, 2022