ICICI Bank CEO job for Kochhar

ICICI Bank CEO job for Kochhar
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First Published: Fri, Dec 19 2008. 01 15 AM IST

Moving up: Chanda Kochhar. Ashesh Shah / Mint
Moving up: Chanda Kochhar. Ashesh Shah / Mint
Updated: Fri, Dec 19 2008. 01 59 PM IST
Mumbai: Confirming a succession that had been widely anticipated, ICICI Bank Ltd is set to formally anoint Chanda Kochhar as chief executive-designate, putting a driven but low-key woman banker at the helm of India’s largest private bank.
Moving up: Chanda Kochhar. Ashesh Shah / Mint
When finally named CEO in May, Kochhar, 47, will be the youngest in the bank’s 54-year history. She will take over from the well-regarded K.V. Kamath who, in turn, will become the non-executive chairman of the bank, replacing N. Vaghul.
ICICI Bank’s board is set to sign off on the new CEO-designate here on Friday, according to four senior executives of the bank and two board members who talked to Mint on condition of anonymity.
While filling the large shoes of the affable Kamath won’t be easy, Kochhar has risen steadily from the day, back in 1984, when Kamath, then group head of leasing and strategy division of the Industrial Credit and Investment Corp. of India, the former avatar of ICICI Bank, met the business management graduate of Mumbai’s Jamnalal Bajaj Institute of Management Studies seeking the post of a management trainee.
Some 25 years later, Kamath, 61, will usher her into the corner suite. Kochhar, a close confidante of Kamath, is currently joint managing director and chief financial officer.
While there have been few doubts in recent years among those who track ICICI Bank about Kochhar’s elevation, the bank’s recent financial and operational stumbles, including significant hits to its share prices amid concerns about its health, had raised some questions about succession, especially the timing of it.
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Indeed, Kochhar is taking over at a time when ICICI Bank’s balance sheet is shrinking and non-performing assets are growing against the backdrop of an unprecedented global credit crunch.
A stock market darling, ICICI Bank’s shares have underperformed this year. Until then, it was India’s most valued bank in terms of market capitalization, comfortably ahead of the much larger State Bank of India (SBI) despite a much smaller asset base.
But since the beginning of 2008, ICICI Bank’s shares have lost 61.75% while the benchmark Sensex index of the Bombay Stock Exchange has fallen 50.33% and the banking index, Bankex, has lost 50.78%. ICICI Bank’s market capitalization has been eroded by Rs84,657 crore and SBI is now comfortably the most valued Indian bank again.
Some ICICI Bank insiders as well as others note that Kochhar hasn’t been overwhelmed by the recent turmoil and a crisis of confidence in the bank’s ability to grow.
An official of the Reserve Bank of India, the banking regulator, who has interacted with her at various meetings says, “Kochhar is very articulate. She knows well the changing dynamics and has started talking about consolidation and not growth. That’s a good sign.” This official did not want to be named.
Conventional wisdom has it that a succession plan was drafted in October 2007 when Kochhar was made ICICI Bank’s joint managing director.
But, around the same time, the bank had actually asked Wayne Brockbank, a professor at the University of Michigan’s Ross School of Business and a human resources consultant, to evaluate the leadership qualities of senior ICICI Bank executives. Brockbank spent a year during which he zeroed in on Kochhar after talking to peers, bosses and subordinates of at least six other senior bank executives.
“Any one of them could have become the CEO,” says one of her colleagues who was a likely early contender for the top job. “What probably tilted the scale in Chanda’s favour is her wide experience in various facets of banking and her equanimity. She has the uncanny ability to remain calm even in most difficult time.”
At ICICI Bank, Kochhar has been exposed to virtually all aspects of banking, except for global treasury.
As a management trainee earning Rs2,300 a month, she was part of a projects group that oversaw industries such as textiles, paper, sugar and petroleum, and was named a junior officer three months ahead of her training period ending.
Kochhar was also, virtually, the first employee of ICICI Bank. In 1993, after the financial institution got the central bank’s nod to float the so-called new generation private bank, she finetuned the concept, recruited from 40 different organizations, selected a core software platform, and even designed the bank’s first cheque books.
If another one of her colleagues is right, Kamath was convinced of Kochhar’s larger potential based on how she set up the bank. In 2000, Kamath would enlist Kochhar to build the bank’s retail business from the scratch. Kochhar, then overseeing the corporate business that accounted for about 50% of the institution’s balance sheet and much more of total profits, was initially reluctant to take up the new assignment.
But in six years, Kochhar ramped up the retail business to about 67% of ICICI Bank’s balance sheet. In 2002, Kochhar joined the bank’s board as an executive director.
Anil Singhvi, vice-chairman of Reliance Natural Resources Ltd of Reliance-Anil Dhirubhai Ambani Group, knows Kochhar from 1995 when he presented a proposal seeking funds to build a 2 million tonne cement plant for Gujarat Ambuja Cements Ltd.
“The tip of her career was her involvement in transforming a lending institution to a bank,” he says. She played a key role along with Kamath in transforming a balance sheet, heavily skewed in favour of corporate lending, to a good mix of retail. I will give full marks to Chanda for this.”
Kalpana Morparia, a former ICICI Bank executive and now chief executive officer, JPMorgan India Pvt Ltd, says she is still impressed with Kochhar’s “management and execution capabilities”.
“She is an extremely focused person...Always calm and poised in extreme stress situations. She never gets rattled,’’ says Morparia
On a lighter note, Morparia recalls how when they used to travel overseas together for bank work, Kocchar rarely gave up her trademark sari. “Only once I could persuade her to wear a western outfit,” says Morparia.
People who have been working with Kochhar describe her as “cool” and almost “clinical” in her work.
“Before any meeting her secretary will call up and confirm the agenda. It’s always very focussed and if she does not agree with something, you would have to come up with alternatives immediately,’’ says one of her colleagues who didn’t want to be identified.
A former ICICI Bank official, who had worked with her, says, “She is reserved and very protective of her turf. Chanda is extremely particular on protocol, you cannot circumvent her. She makes it very clear that I’m the boss and wants full control.’’
In 2006, Kochhar was appointed as deputy managing director with responsibility for both corporate and retail banking businesses and, by the time she was made the joint managing director in October 2007, she was handling the international business as well as compliance and risk management.
Only two women have risen to the top position in Indian banking, both at state-run banks following their nationalization. Ranjana Kumar took over the reins at the Chennai-based Indian Bank in May 2000.
The second woman chairperson, H.A. Daruwalla, reached the top in 2005 at the Mumbai-based Central Bank of India. Kochhar will become CEO after Daruwalla retires and will then be the lone woman bank CEO in India, at least as of now.
Two of the four deputy governors at the RBI are women—Usha Thorat and Shyamla Gopinath. RBI had to wait 68 years to get its first woman deputy governor in K.J. Udeshi, who was elevated to the post in 2003.
Out of 2.18 lakh bank officers in India, only 5.6% are women. But women’s representation goes up to 21% when it comes to the clerical cadre. Overall, women account for 14% of 7.71 lakh state-run bank employees
ICICI Bank, however, has about 33% women and at the senior level, this rises to 40%. The bank’s board has two women directors: Kochhar and an executive director Madhabi Puri Buch. Also on staff are Shikha Sharma, who heads the group’s life insurance business, and Renuka Ramnath, who heads the venture capital wing.
Foreign banks in India do have women CEOs. Naina Lal Kidwai heads the Hongkong and Shanghai Banking Corp.’s Indian business and Manisha Girotra runs UBS’s India operations. Renu S. Karnad formulates home loan policies for Housing Development Finance Corp, India’s premier mortgage firm, as its executive director, and Falguni Nayar and Shanti Ekambaram run large and important businesses at Kotak Mahindra Bank Ltd.
tamal.b@livemint.com
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First Published: Fri, Dec 19 2008. 01 15 AM IST