Mumbai: The appointment of Gautam Vir as managing director and chief executive officer of ING Vysya Bank Ltd has hit a roadblock at the Reserve Bank of India (RBI), which has sent back the proposal, objecting to Vir’s pay package.
“We have always maintained that the compensation package offered has to be commensurate to the size of the bank,’’ said a senior RBI on condition of anonymity as he is not authorized to speak to the media.
For the quarter ended 31 December, ING Vysya Bank’s assets were about Rs29,000 crore. The bank’s retired chief executive officer Vaughn Richtor got an annual compensation of Rs1.1 crore in fiscal 2008.
K.V. Kamath, chief executive officer and managing director of India’s largest private sector lender, ICICI Bank Ltd, received a compensation of about Rs2.6 crore and stock options in fiscal 2008.
By end December, ICICI Bank’s assets were Rs3.74 trillion, about 13 times that of ING Vysya Bank.
HDFC Bank Ltd’s managing director and chief executive officer Aditya Puri received almost as much as Kamath in fiscal 2008. The bank’s assets were Rs1 trillion in December 2008.
“We have sent the proposal back to the bank seeking some clarifications,” the RBI official said. An email sent to an RBI spokesperson remained unanswered.
An official from ING Vysya Bank, who did not want to be quoted, said the proposal has been sent back by RBI, seeking clarifications on the compensation package.
According to him, Vir’s proposed package is substantially higher than what Richtor used to get, but Mint could not independently verify details of the package.
An ING Vysya Bank spokesperson declined to comment on the matter.
Vir, who was till recently heading Development Credit Bank Ltd, was not available for comment.
The government appoints the chiefs of public sector banks. The private bank chiefs are appointed by their respective boards, subject to clearance by RBI.
Richtor retired in April and pending the appointment of a new chief executive, the bank’s current chief financial officer Jayant Mehrotra is looking after day-to-day operations.
Incidentally, ING Group’s mutual fund arm is also scouting for a chief. In the interim, Eddy Belmans, general manager, north Asia, is heading the asset management business.
In the midst of a restructuring, the ING Group is planning to divest €6-8 billion (Rs39,480-52,640 crore) in non-core activities in phases. The global financial institution of Dutch origin offers banking, investments, life insurance and retirement services, and serves at least 85 million private, corporate and institutional customers across Europe, North and Latin America, Asia and Australia.
The group early this month announced that it would focus on creating a predominantly European bank with one integrated balance sheet.
There have been apprehensions that the group could probably look at divesting its stake in ING Vysya Bank. However, according to Nanne Bos, spokesperson for ING Retail and Insurance Asia-Pacific, ING remains confident about Asia’s long-term financial and economic prospects and potential.
“On the banking side we consider our strategic stakes in TMB Bank (Thailand) and ING Vysya Bank (India)...as the selected growth opportunities, and we will, therefore, remain committed to these partnerships and we will continue to asses these activities going forward on an ongoing basis,” Bos said by email.
ING holds 44% stake in ING Vysya Bank.
“As an international bank, we have an unique position in India as we are the only foreign bank with a controlling stake in an Indian private banking sector. We took over the management in 2002 and have made great progress in turning around the business,” Bos said.