Mumbai: The troubles for the ICICI Bank Ltd board go beyond appointing a successor to the incumbent chief executive Chanda Kochhar, with India’s second largest private bank struggling to retain the faith of foreign portfolio investors.

At least three foreign investors, including Baillie Gifford and Co., Abu Dhabi Investment Council, Noosa, and Commonwealth Bank of Australia, have cut their shareholdings in ICICI Bank, according to filings with the stock exchange, and two executives familiar with the development.

Also read: Chanda Kochhar goes on leave, ICICI Bank names Sandeep Bakhshi as COO

On 9 April, Baillie Gifford sold 29.4 million shares of ICICI Bank at 280 apiece, while Abu Dhabi Investment Council, Noosa, sold 1.77 million shares, at 289 per share on 4 June, according to the filings with the stock exchanges.

In May, Commonwealth Bank of Australia sold its entire stake in ICICI Bank, said one of the executives cited above, requesting anonymity.

“Foreign investors are not happy with this uncertainty over allegations of corporate governance and questions raised on the CEO. The board has not helped in addressing these problems and, for this reason, FIIs are selling shares," the executive added.

Mint could not independently ascertain the remaining share holdings of Baillie Gifford and Abu Dhabi Investment Council, Noosa.

Email queries to Baillie Gifford and Abu Dhabi Investment Council, Noosa, seeking comments did not elicit any response. A spokesperson for Commonwealth Bank of Australia declined to comment.

“We are not able to confirm any CBA (Commonwealth Bank of Australia) shareholding in ICICI Bank. CBA’s broader business includes a number of businesses in wealth management, superannuation and funds management. As such, it is possible the aggregate view of CBA’s shareholdings includes shareholdings of investment managers, who act and invest on behalf of their clients. We are unable to comment on their behalf," said a Commonwealth Bank of Australia spokesperson.

Although all three investors held less than 1% stake in ICICI Bank, the fact that FIIs are selling shares explains the underperformance of the company’s shares since the controversy around Kochhar first surfaced in the last week of March. Between 28 March and 18 June, ICICI Bank’s shares rose 5.06%, underperforming the Sensex and BSE Bankex, which gained 7.82% and 8.81%, respectively.

In the past three months, the ICICI Bank board has added two independent directors and a new government nominee, but is yet to name a new chairman.

The incumbent chairman, M.K. Sharma’s term ends on 30 June. Sharma, 71, who has been Kochhar’s most vocal supporter, cannot seek reappointment as the Reserve Bank of India guidelines bar independent directors of 70 years, or more, from asking for an extension.

Kochhar’s nine-year stint has come under cloud following allegations of “conflict of interest" over time and “quid pro quo" in course of her work in dealing with the Videocon loan case.

Now, questions are being raised on whether the CEO disclosed to the bank’s board about her husband, Deepak Kochhar’s partnership in a firm, NuPower, when the bank sanctioned loans to companies controlled by Venugopal Dhoot, the owner of Videocon group. Dhoot was also a founding partner of NuPower.

The Videocon group had secured $500 million in loans from a consortium of lenders led by ICICI Bank, and 19 other banks in April 2012. The whistle blower, Arvind Gupta, has alleged that the loans to Videocon group companies were approved by ICICI Bank after Dhoot had invested in NuPower.

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