The first management rejig at Kotak Mahindra Bank by its new CEO, Ashok Vaswani, has preempted potential exits of top executives who were seen as internal contenders for the top job, likely ensuring policy stability and operational continuity at India’s third-biggest private bank by market capitalisation.
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 CEO position.
Before this appointment, there were news reports that KVS Manian was in the fray for the CEO position at Federal Bank, where the incumbent isn’t getting the regulatory nod for another term.
“There was news flow suggesting that Mr Manian could be one of the candidates for the MD & CEO post (due to be vacated in September 2024) at Federal Bank, but Kotak Mahindra Bank‘s (KMB) move should potentially eliminate any such risk,” said Anand Dhama, equity analyst at Emkay Global. “Separately, retiring 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 by KMB should possibly alleviate any immediate risk of top management attrition.”
A few days ago, Jefferies had highlighted Manian’s likely candidature for the top job at Federal Bank as a negative for Kotak Mahindra Bank. Over a decade ago, when Chanda Kochhar was appointed CEO of ICICI Bank among half a dozen internal candidates, most of those in the running moved out to other banks and financial institutions.
The other reason the elevation of senior executives is seen as a positive is Vaswani’s focus on scale. According to analysts, to scale the business, there is a need to ensure the continuity of senior executives. “For a new senior executive, immediately chasing scale without first understanding the intricacies and dynamics of the organisation and its market can be detrimental,” said an analyst.
Vaswani, who sees digital transformation as an opportunity for Kotak Bank, prioritised enhancing brand strength.
“Kotak is a very strong brand, has a very strong reputation, is very well capitalised and is an incredible platform offering the full array of financial products and services. Kotak has done very well and really the challenge and the story from here on is how we scale. And scaling is not just for the size of scale, scaling is for remaining and becoming relevant as India steps up to become the third-largest economy in the world,” said Vaswani in his first interaction with analysts soon after declaring quarterly results.
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