Home / News / India /  RBL Bank shares tank 17% after appointment of new MD & CEO. What analysts say

Shares of RBL Bank tumbled 17% to 93 apiece on the BSE in Monday's early deals after the appointment of the bank's new managing director and chief executive officer (CEO), nearly six months after Vishwavir Ahuja stepped down from the position due to the RBI’s intervention.

The private sector lender on Saturday announced the appointment of veteran banker R Subramaniakumar as its new MD & CEO for a period of three years. 

Subramaniakumar is a veteran public sector banker with nearly four decades of experience. “Given his profile, he comes across as a troubleshooter with decent success at IOB/DHFL. However, his selection as MD & CEO of a private bank, despite interim management’s assurance on asset quality and plans to reorient the bank on the path of growth, is a little surprising," said analysts at brokerage Emkay in a note.

RBL Bank had come under the Reserve Bank of India (RBI) scrutiny in December 2021, after which the regulator appointed its CGM Yogesh Dayal as the additional director on the bank’s board for a term of two years.

The brokerage believes that his selection by RBL and relatively swift approval by the RBI indicate possible RBI blessing throughout the process to bring stability & credibility to the bank and the new MD’s priority would be to improve portfolio quality, strengthen compliance/risk management architecture and stabilize the bank.

"That said, we believe there could be a potential risk of some asset quality clean-up (if required) and mid-level management attrition as well. Amid the uncertainty, we downgrade the stock to Hold from Buy, with a revised target price of 110 ( 140 earlier). We expect the stock to remain under pressure in the near term, as investors would like to wait for the new management’s business strategy, including near-term growth/asset-quality movement," the note stated.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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