Mumbai: Finally addressing the fallout of a 2006 April succession that saw O.P.Bhatt superseding his senior colleagues to the chairman’s post, the government is planning several changes in State Bank of India’s (SBI) senior management.
It will likely offer new assignments to two of its managing directors, Yogesh Agarwal and Tara Shankar Bhattacharya. Agarwal may become the head of a large Mumbai-based public sector bank and Bhattacharya could be given a new post outside the banking industry. Regulations governing promotions in public sector banks mandate that an individual cannot be appointed chairman unless he has two years of service left.
Bhatt, Agarwal and Bhattacharya declined to comment on the issue that has been resolved only after the intervention of a bureaucrat from the ministry of finance ministry who is on the board of the bank.
Executives at SBI admitted that some of their senior managers do not get along and this has to do with Bhatt superseding Agarwal and Bhattacharya. The two-year rule worked against Bhattacharya who is set to retire in 2008 January, and Agarwal simply lost out in the race. Similar succession dramas in the private sector usually result in the losers leaving for other firms, but moving from the senior level at a public sector bank is not the easiest thing to do.
The government has faced similar situations before, but has been plain lucky.
“On earlier occasions, the superseded executives did not have too many months to retire, but this time things are different with Agarwal, for instance, having four more years to go,” says a source familiar with the government’s plans.
Agarwal was also the senior-most executive in contention for the chairman’s post in a succession drama that was played out between 2005 September and 2006 April, and which involved five of the bank’s senior-most executives.
A government official confirmed, on condition of anonymity, that Agarwal and Bhattacharya would be moved out of SBI. “We are building a cohesive team at the top of the country’s largest bank to take it forward,” he said.
The government plans to choose two new managing directors from the senior executives of the bank, and a third one from outside.
The government has already discussed its plan with banking regulator Reserve Bank of India (RBI), the original owner of the bank, although SBI, like other public sector banks, was effectively run by the ministry of finance.
On Thursday, the government decided to effect a cashless transaction to transfer RBI’s 59.73% stake in SBI to itself. The SBI stock jumped 5.72% on the news to close at Rs1,203.10 on the Bombay Stock Exchange and its market cap rose to Rs63,319 crore.