Certainly one of India’s most distinguished bankers is being compelled out of his job after greater than 14 years.
Sure Financial institution introduced Friday that India’s central financial institution had ordered its founder and CEO Rana Kapoor to step down in January 2019. Its shares crashed almost 30%, wiping round $three billion off the financial institution’s market worth.
Kapoor’s time period as CEO was as a consequence of run till September 2021.
Sure Financial institution’s assertion didn’t say why the central financial institution had ordered Kapoor out, and a spokesperson wouldn’t present additional particulars. India’s central financial institution — the Reserve Financial institution of India — additionally declined to remark.
Kapoor, a profession banker who spent over a decade at Financial institution of America (, based Sure Financial institution in 2003 together with his brother-in-law and grew it into one in all India’s greatest personal lenders, with greater than $40 billion in belongings. )
The financial institution stated its board would meet on Tuesday “to determine on the longer term plan of action.”
Traders need solutions.
“Extra readability is required, and we do have questions, however we’re not panicking,” analysts at Jefferies stated in a be aware on Friday, including that they thought the financial institution may survive a change of management and had enough capital to assist its enterprise.
The financial institution’s future will largely rely upon the way it manages the succession.
“This might be a check of the governance construction that Rana Kapoor has put by,” Vaidyanathan Krishnamurthy, a professor of finance on the Indian Faculty of Enterprise, advised CNN. “If it’s not in place, then I’d count on Sure Financial institution’s inventory worth to fall much more,” he added.
The transfer comes as India tries to scrub up its banking sector, which is weighed down by tens of billions of in dangerous loans. Whereas the Indian authorities needed to give its state-owned banks a $32 billion bailout final yr, personal gamers like Sure Financial institution have additionally come underneath elevated scrutiny.
“The [central bank] has advised the personal sector banks to scrub up their books … and that hasn’t occurred,” Krishnamurthy stated. “It sends a really robust sign to the personal sector banks to get their acts collectively.”
CNNMoney (New Delhi) First printed September 21, 2018: 9:58 AM ET