Mumbai: ICICI Bank Ltd, India’s largest private sector bank by assets, has started reorganizing its businesses by focusing on new areas and changing the portfolios of some of its senior executives.
Managing director and chief executive officer Chanda Kochhar has announced the restructuring exercise and listed the new focus areas through two emails sent to the bank’s employees, both of which have been reviewed by Mint. One of them was sent before she formally took over the new assignment on 1 May.
Changing focus: ICICI’s Chanda Kochhar says the bank periodically reviews its organizational structure to ensure it is in tune with evolving operating environment and aligned to achieve defined objectives. Abhijit Bhatlekar / Mint
Kochhar’s elevation to the top coincided with the exit of two senior executives of the ICICI group—Shikha Sharma, head of ICICI Prudential Life Insurance Co. Ltd, and Renuka Ramnath, head of ICICI Venture Funds Management Co. Ltd.
The bank has appointed Vijay Chandok as head of retail and small and medium enterprises business. Maninder Juneja, who had been heading the retail liabilities division, will continue to do so with additional responsibility of supervising branch banking, said an ICICI Bank official who did not want to be named as he is not the official spokesperson of the lender.
The bank has 1,438 branches and is in the process of opening 580 branches during the current fiscal to March 2010.
The changes in the retail business division has come after Sandeep Bakhshi was appointed deputy managing director overseeing retail and rural banking. Bakhshi has replaced V. Vaidyanathan, who had moved to ICICI Prudential Life Insurance as managing director. Bakhshi was the managing director and chief executive director of ICICI Lombard, the group’s general insurance company.
In a parallel development, Sachin Khandelwal, who was heading the credit cards division, has been given responsibility for non-resident Indian, global private banking and remittances business. Vinayak Prasad has been made the head of credit card division.
“We periodically review our organizational structure to ensure that it is in tune with evolving operating environment and is aligned to achieve defined business objectives as well as capitalize on the emerging opportunities,” one of Kochhar’s emails said.
ICICI Bank’s spokesman Charudatta Deshpande declined to comment.
The bank is also reorganizing its transaction banking business, including trade services and other banking services to small and medium enterprises.
For the effective roll out of the commercial banking business mandate, select “mega branches” have been identified primarily on the basis of intensity and concentration of commercial banking opportunities across companies (large, medium and small enterprises), according to Kochhar’s emails. “These branches will deepen relationships with corporates to enhance relationship value and to ensure increase in current account float and commercial banking fees.”
“The heads of these branches would have adequate level of flexibility, within a defined control framework, to ensure faster customer service and decision-making at the point of origination of the transaction.”
Essentially, this means more powers to the branches and decentralization of operations.
The bank has decided to focus on local deposits instead of bonds to raise cheap resources overseas. “Our international branches and subsidiaries will focus on building and strengthening their deposit franchises to achieve the desired funding profile and capitalize on appropriate financing opportunities,” one of the emails said.
Canada saw an increase of about Canadian $1.75 billion in term deposits during fiscal to 31 March and its customer accounts increased to at least 280,000 on the same date from about 200,000 in the previous fiscal.
Similarly, its UK subsidiary saw an increase of about $1.80 billion (Rs8,550 crore) in retail term deposits during fiscal 2009. Following this, the proportion of retail term deposits in total deposits in the UK rose to 58% on 31 March from 16% in the previous year. During this time, its UK customer base rose from 210,000 to at least 310,000.
Apart from raising deposits, the bank has been focusing on its quality of assets. The management in a recent conference call said that after adjusting for write-offs and amounts sold to asset reconstruction companies, the increase in gross non-performing assets, or NPAs, during the March quarter was Rs1,250 crore, with most of the stressed assets being generated in the retail segment. In the December quarter, the comparable figure was Rs1,200 crore. For the full fiscal 2009, its gross NPAs rose by Rs6,000 crore.
It has restructured assets worth Rs1,115 crore during the March quarter and there are applications for such restructuring for loans worth Rs2,000 crore. The Indian banking regulator has allowed banks to recast loans given to corporations as well as individuals affected by the economic slowdown.
The bank management had recently said that while credit card and unsecured loan losses are likely to increase, the proportion of such loans is coming down.
“Debt servicing and non-performing assets management will be driven by strong analytics, relationships, proactive debt management counselling and customer education,” Kochhar said in one of her mails. “The customer accounts will be monitored closely and proactive action will be taken before customers come under stress.”
Since Kochhar took over, the bank’s stock has risen by 41.48% on the Bombay Stock Exchange. It closed at Rs748.50 on Tuesday.