Will absence of Rana Kapoor at YES Bank roil firm's shares?

Yes Bank may have a new chief executive by early next year as incumbent Rana Kapoor, credited with establishing the credentials of the private lender, is likely to step down after the Reserve Bank of India (RBI) limited his term until end-January.“RBI has intimated that Shri Rana Kapoor may continue as the MD & CEO till 31 January 2019,” Yes Bank said in a stock exchange notification late Wednesday. The bank’s board is scheduled to meet on September 25 (Tuesday) to decide the future course of action, the bank said.This is perhaps the first time when a bank, perceived to be promoterdriven, will lose its original promoter having control over operations.The move could prompt investors to pare down holdings amid leadership uncertainty at the bank, and the stock could slide on Friday. Indian markets have a trading holiday Thursday. “Rana Kapoor is considered a one-man army in Yes Bank.His absence from an active role would cast doubts on the bank’s future performance,” an analyst tracking the stock said, declining to be named.Earlier on August 31, Yes Bank said that it had received RBI’s approval for continuance of Kapoor as MD and CEO until further notice from the central bank.Prior to that in June, Yes Bank’s shareholders had approved Kapoor’s re-appointment for three years, subject to final approval from the central bank.In 2004, Rana Kapoor and Ashok Kapur founded the bank, which had a stellar stock-market debut. Yes Bank shares have surged 25.5 times in about 13 years generating 28% CAGR returns, show data from Bloomberg. From Rs 12.5 in June 2005, its shares have climbed to Rs 318.50 apiece. 65875530 During the same period, BSE Bankex expanded 630%, falling short of the bank’s performance by a wide margin. The bank is one of the constituents of BSE Bankex, the broader industry index.The latest move may also affect other new-generation private lenders, which may face difficulties in retaining their original promoters with controlling stakes.The RBI has asked Uday Kotak, managing director of Kotak Mahindra Bank, to reduce his stake to 20% before the year-end from 30% now. Although Kotak had sought to lower his stake to 20%, as stipulated, by selling nonconvertible perpetual noncumulative preference shares to a group of investors in August, the RBI rejected that plan citing the nature of the instrument.About three years ago, the bank witnessed a bitter board-room battle after late Ashok Kapur’s widow and daughter claimed board representations. Kapur was killed in a terror attack in Mumbai.

from Economic Times https://ift.tt/2QHRLs1