Mumbai: Yes Bank Ltd on Wednesday said its board will meet on 13 December to consider appointment of a new chairman, two independent directors to replace departing directors, and the CEO search panel’s recommendation to appoint a successor to the current MD and CEO Rana Kapoor. The bank also said that its promoters are seeking a mutual resolution to ensure better support and coordination for outstanding issues.
On 21 November, Mint first reported that in the wake of a quick exodus at the top level, Yes Bank has advanced its board meeting by a month to appoint a new chairman, new CEO and a new independent director to replace the latest resigning board member Rentala Chandrashekhar.
The board was originally scheduled to meet on 16 January 2019 to consider financial results and make the board level changes cited above.
Yes Bank’s board has witnessed a series of resignations in just two weeks. Ashok Chawla, chairman of the bank resigned last week. Vasant Gujarathi, chairman of Yes Bank’s audit committee and an independent director on the board resigned along with Chawla. Chandrasekhar, an independent director on the board and the chairman of Yes Bank’s IT and risk management committee resigned on Monday. Separately, O P Bhatt, an external expert on the CEO search panel of Yes Bank also resigned last week.
These resignations following the Reserve Bank of India’s (RBI) direction on 17 September to restrict the term of Yes Bank’s MD &CEO Rana Kapoor to 31 January, 2019 has resulted in a correction of the bank’s stock.
Despite the bank’s two promoters Kapoor and Madhu Kapur initiating talks to settle their decade old family feud, over the past two weeks, the bank’s shares have fallen 51% from its peak this year on BSE Ltd.
In a bid to restore investor confidence and arrest the fall in the bank’s stock Kapoor was expected to update the bank’s shareholders about the recently initiated truce process between the two estranged promoter families, I.e.Rana Kapoor’s and Madhu Kapur’s.
Chandrasekhar, who joined the bank as an independent director in April, 2018, while tendering his resignation letter on Monday, indicated that he was not expecting such instability due to the series of resignations from the bank recently.
Mint has reviewed a copy of Chandrasekhar’s resignation letter.
“.. I was attracted by the vision of a digital first, new age bank and to my role as an independent director helping to steer this agenda. I had explicitly indicated this at that time," said Chandrasekhar’s letter.
Referring to the recent resignations, Chandrasekhar said, “I have been deeply concerned about recent developments at Yes Bank and dismayed at the manner in which they have been dealt with. It is even more distressing that all this should have occurred during a critical transition period when tact, wisdom and purposeful, well-considered actions were called for," said the letter.
“I find that the resultant situation arising from recent developments and their handling is not conducive to the discharge of my duties… I am confident that the institution has adequate inherent strength to overcome the challenges and emerge stronger eventually," said Chandrasekhar in his letter and a subsequent email to Kapoor after Chandrasekhar was asked by Kapoor to reconsider his decision and continue at least till April 2019.
Kapoor wrote to Chandrasekhar on Monday, stating that if Chandrasekhar reconsiders his decision it will help the bank to mitigate the adverse market impact, and allow the bank to stabilize both at the board and the organization level.
However, the bank’s NRC has begun a review process of the board members and this created more uncertainties for the existing board members and those in board level committees, including the one headed by Chandrasekhar.
The bank has recently taken measures to improve its corporate governance, accounting and audit processes. The bank has sent a report on the recent measures in this regard to RBI in October," said a person directly aware of the development.
On 8 October, Mint first reported that Yes Bank promoters have initiated moves to reach an out-of-court settlement. Both sides have begun preliminary talks to withdraw a long-drawn and bitter legal case against each other and put an end to their decade-old feud.
Analysts belive if this happens the appointment of directors on the Yes Bank board will be hassle-free in future.
At 10.06am, Yes Bank shares traded 3.30% up at ₹ 198.90 per share.