RBL Bank shares fall 17% 93 on the BSE in early deals on Monday following the appointment of the new managing director and chief executive officer (CEO) of the bank, nearly six months after Vishwavir Ahuja stepped down due to RBI’s intervention.
The private sector lender on Saturday announced the appointment of veteran banker R Subramaniakumar as its new MD and CEO for a period of three years.
Subramaniakumar is a seasoned public sector banker with an experience of nearly four decades. “Looking at his profile, he comes across as a troubleshooter with decent success in IOB/DHFL. However, his selection as MD and CEO of a private bank, despite interim management’s assurances on asset quality and plans to re-orient the bank on the growth path, is a bit surprising,” analysts at brokerage Emkay said. Said in the note.
RBL Bank It came under the scrutiny of the Reserve Bank of India (RBI) in December 2021, following which the regulator appointed its CGM Yogesh Dayal as an additional director on the bank’s board for a period of two years.
The brokerage believes that their selection by RBL and relatively faster approval by RBI indicates that RBI’s blessings are possible throughout the process to bring stability and credibility to the bank and the new MD’s priority is in the quality of the portfolio. Improvements, compliance/risk management architecture will have to be strengthened and stabilized. Bank.
“That said, we believe there may be some asset quality cleanup (if required) and potential risk of mid-level management. Amid the uncertainty, we consider the stock with the revised target price to be removed from the hold. Let’s downgrade to hold. 110 ( 140 earlier). We expect the stock to remain under pressure in the near term, as investors will want to wait for new management’s business strategy, which includes near-term growth/asset-quality movement,” the note said.
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