Mumbai: American investors in ICICI Bank Ltd want its CEO Chanda Kochhar removed and the board completely overhauled, research firm Macquarie Research said in a report dated 20 June. The report was based on meetings with top shareholders of ICICI Bank across the US east coast, mid-west and west coast.
“They want the CEO to go. They were very disappointed with the board and the way the chairman has handled the entire issue," said the report.
On 18 June, the ICICI Bank board said that Kochhar, who is facing conflict-of-interest allegations, will go on leave until a committee investigating allegations of impropriety completes its work. In the interim, Sandeep Bakhshi—who has been appointed as the chief operating officer (COO)—will steer its businesses.
Macquarie said in the report that investors are sceptical about an internal candidate being appointed as the CEO.
“They are not very confident of an insider getting appointed as the CEO. They believe the culture and DNA of the organisation can be changed largely by an outsider. They will be more confident if an external candidate gets appointed as the CEO," said the report.
The decision to name Bakhshi as ICICI Bank COO came after the board decided to set up a panel under justice B.N. Srikrishna to investigate allegations of conflict of interest and quid pro quo against Kochhar in the Videocon loan case.
Questioning the board’s decision to appoint a COO, Macquarie likened it to a typical public sector or bureaucratic style of decision-making, where someone is temporarily suspended or asked to go. The report also questioned Bakhshi’s ability to change the culture of ICICI Bank, pointing out that he had spent the last 15 years in the insurance business.
According to the report, investors are worried about the stock losing its appeal due to the controversy surrounding the bank’s CEO. However, they are not questioning the fundamentals of the firm as they know the stock is cheap and the bank is well-capitalized and its deposit franchise excellent, said the report.
On Thursday, Goldman Sachs downgraded ICICI Bank from its ‘conviction buy list’ of stocks to ‘buy’. The action was attributed to uncertainty over the outcome of the independent inquiry as well as lack of visibility around succession planning for the CEO role.
Mint reported on 1 June that Kochhar has been asked to remain on leave until a probe is over. ICICI Bank, however, had then said the board has not asked Kochhar to go on leave. “She is on her annual leave which was planned in advance," the bank said in an exchange filing.
Separately, markets regulator Securities and Exchange Board of India (Sebi) is investigating whether ICICI Bank and Kochhar failed to make adequate disclosures to the bank’s board about her husband Deepak Kochhar’s partnership in a firm, NuPower Renewables, when the bank sanctioned loans to companies controlled by Venugopal Dhoot, the owner of Videocon group.
Dhoot was also a founding partner of NuPower.
Also read: Chanda Kochhar and ICICI Bank: A bitter parting?