Asia’s richest banker, Uday Kotak, is seeking approval from market. Even after resigning as CEO in December, Uday Kotak wants to be on the board of Kotak Mahindra, the $44 billion bank bearing his name. The 64-year-old’s successor will be decided by India’s regulator. The billionaire’s succession plans are threatened by the stock’s recent underperformance.
Apart from being the founder of Kotak Mahindra, Uday Kotak is its 26% owner, and will have been in control 20 years when he retires in December. Last week, the Indian bank refuted a media claim that the Reserve Bank of India is influencing it.
It’s delicate. Kotak—the man and the bank—has excelled for years. The government turns to the billionaire for difficult financial issues. The Mumbai-based institution avoided the bad loan issue. Refinitiv data reveals that since 2003, when it got a banking license, its shares has returned 32% annually, outperforming larger peers HDFC Bank (HDBK.NS) and ICICI Bank (ICBK.NS).
Market signals vary. Last year, Kotak’s son Jay, a five-year bank veteran, spoke at an investor event. Banks seldom promote family members, unlike tycoon-run businesses in India. Since April, when 99% of shareholders voted to keep Kotak as a non-executive director, the company has lagged the Nifty Bank Index by nine percentage points. The gap complicates the RBI’s choice.
The regulator has fired private bank CEOs for improper loan management and reorganized bank boards for weak succession planning. It might support an external Kotak replacement as a precaution. The industry’s top don’t mind a safe set of hands staying. At a time when Indian consumer loans have soured, bringing an outsider-CEO to a functioning bank may invite difficulty. The market’s support will benefit Uday Kotak and his bank regardless of regulators’ decisions.
The Reserve Bank of India is encouraging Kotak Mahindra Bank to choose an outsider to succeed billionaire founder Uday Kotak as CEO. Kotak’s tenure expires December 31.
The bank stated the same day that RBI had not communicated with Kotak Mahindra Bank or its board members about succession.
Conclusion:-
Asia’s richest banker, Uday Kotak, is seeking approval from the market to continue on the board of Kotak Mahindra, the $44 billion bank he founded. The 64-year-old’s successor will be decided by India’s regulator, as the stock’s recent underperformance threatens his succession plans. Kotak is the founder and 26% owner of Kotak Mahindra, which has been in control for 20 years. The Indian bank refuted a media claim that the Reserve Bank of India is influencing it. Kotak has excelled for years, and the government has turned to him for difficult financial issues. The Mumbai-based bank has outperformed larger peers HDFC Bank and ICICI Bank. The Reserve Bank of India is encouraging Kotak Mahindra Bank to choose an outsider to succeed Kotak as CEO, as Kotak’s tenure expires on December 31.
