Despite the board of ICICI Bank saying it has full confidence in its MD and CEO, for the past several weeks, investors and analysts have been of the view that a change of guard is urgently required to repair the damage done by the allegations of nepotism against Chanda Kochhar. Now, a notice from the market regulator Securities and Exchange Board of India (Sebi) may act as a catalyst for that.
In a stock exchange filing on Friday, the country’s largest private sector bank by assets said “The MD and CEO and the Bank received a Notice from Sebi on 24 May 2018”, adding that the notice sought responses on matters relating to alleged non-compliance with certain provisions of the erstwhile Listing Agreement and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The bank said that an appropriate response would be submitted to the regulator.
Analysts are of the view that this is the cue for Kochhar’s exit. “There needs to be change in leadership at the bank. Sebi has initiated the right process,” said IIFL’s Sanjiv Bhasin. “The faster the bank can make that change happen, the better it will be for the bank itself and its shareholders,” he added.
Bhasin said he sees a significant uptick for the bank’s stock going forward. “As soon as they get in another professional, probably from within the bank to lead it, the stock could work wonders as they have cleansed their book. We think the stock could go up to Rs 350-360 levels,” he said.
Another banking analyst who did not wish to be named said Kochhar’s exit would be in the best interests of the bank. “There have been some very specific questions asked about the loans given to Videocon and the money invested into NuPower. However, the answers have not been specific or satisfactory. I think it’s high time she stepped down,” the analyst said.
ICICI Bank’s stock had declined nearly 7% between January 1 and early May before recovering in the past couple of weeks. The stock closed at Rs 296.50 on the BSE on Friday, 0.25% lower than the previous day’s close.