The first administration at Kotak Mahindra Bank by its new CEO, Ashok Vaswani, has prevented potential exits of top executives who were seen as internal contenders for the top job, likely ensuring political stability and operational continuity at India’s third-largest private bank according to market capitalization
The stock climbed 1.8% Tuesday, reflecting investor confidence in the appointments.
On Monday, the bank announced the appointment of KVS Manian as joint managing director and Shanti Ekambaram as deputy managing director with effect from March 1, 2024. Both were seen as internal candidates for the post of CEO.
Prior to this appointment, there were news that KVS Manian was in contention for the post of CEO at Federal Bank, where the incumbent does not get the regulatory nod for another term.
“There was a news flow suggesting that Mr. Manian could be one of the candidates for the post of MD & CEO (vacant in September 2024) at Federal Bank, but the move by Kotak Mahindra Bank (KMB) should perhaps eliminate such risk,” said Anand Dhama, equity analyst at Emkay Global. “Separately, retired group CFO Jaimin Bhatt will be replaced by Deepak Gheewala (COO), while Milind Nagnur will now hold the dual position of CTO & COO. Paul Parambi (CRO-KMB) has been elevated as Group CRO. We believe such a rejig of KMB may should mitigate any immediate risk of senior management attrition.”
A few days ago, Jefferies highlighted Manian’s likely candidacy for the top job at Federal Bank as a negative for Kotak Mahindra Bank. More than a decade ago, when Chanda Kochhar was appointed CEO of ICICI Bank from among half a dozen internal candidates, most of those in the running moved on to other banks and financial institutions.
The other reason the rise of senior executives is seen as positive is Vaswani’s focus on scale. According to analysts, to scale the business, it is necessary to ensure the continuity of senior executives. “For a new senior executive, immediately chasing scale without first understanding the intricacies and dynamics of the organization and its market can be counterproductive,” an analyst said.
Vaswani, who sees digital transformation as an opportunity for Kotak Bank, prioritized improving brand strength.
“Kotak is a very strong brand, has a very strong reputation, is very well capitalized and is an incredible platform offering the full suite of financial products and services. Kotak has done very well and really the challenge and the story from here is how. we scale. And scaling is not just for the size of scale, scaling is to stay and become relevant as India steps towards becoming the third largest economy in the world,” Vaswani said in his first interaction with analysts soon after declaring quarterly results. .