Event update: ICICI Bank (Outperformer) - New COO reinstills confidence in management
ICICI Bank announced the appointment of Sandeep Bakshi as the Chief Operating Officer (COO) of the bank for 5 years effective tomorrow – June-19, 2018 or on the date of regulatory approvals, whichever is later. All executive directors and the executive management team will report to Mr Bakshi. Bakshi is currently the CEO of ICICI Prudential Life Insurance.
Bakshi will report to Board in Chanda’s absence: Chanda Kochhar remains the MD&CEO of ICBK but she will be on leave till the current enquiry into the allegations of conflict of interest against her is complete. While Mr Bakshi will report to her, during the period of her leave, he will report to the Board.
Vast retail and corporate banking experience: Mr. Bakhshi has been the Managing Director & CEO, of ICICI Prudential Life Insurance Company, since August 01, 2010. Mr. Bakhshi has extensive experience of leading both corporate and retail businesses across ICICI Group.
Kannan will be CEO of IPru: Mr NS Kannan, the current ED of ICICI Bank will take over as the CEO of ICICI Pru Life in place of Mr Bakshi. Kannan has been an Executive Director of ICICI Prudential Life Insurance Company before and has good knowledge of the company and sector.
Win-win for both ICBK and IPruLife: We see Mr Bakshi as the defacto interim CEO. We believe he will take over as CEO from Chanda Kochhar later. His good reputation and his experience in banking and insurance make him an appropriate candidate for the CEO’s post. We believe he will continue with the existing policies of the bank. With today’s announcement ICICI’s board has ensured smooth business continuity and addressessed concerns on succession planning. Since March, newsflow on allegations about conflict of interest against the current CEO has impacted investors’ confidence. We believe today’s announcement is positive as investors can stop worrying about succession planning issues and focus on the earnings turnaround at the bank. With confidence around business continuity, we reiterate OP on ICICI Bank. Our target price remains unchanged at Rs370. While this announcement is positive for ICICI Bank, IPruLife has also got a highly experienced CEO in Mr Kannan who has deep knowledge of the insurance segment and has the experience of being part of the top management team of IPruLife earlier.
What happens when Chanda Kochhar’s term expires: Ms Kochhar’s term ends in March 2019. We believe six months before the expiry of her term a search committee will be appointed to find her replacement. While the search committee will screen both internal and external candidates, the likelihood of Mr Bakshi being selected as CEO is very high.
No time frame for enquiry report: ICICI Bank has launched an independent enquiry headed by ex-Supreme Court judge, Justice Shrikrishna to probe into allegations of conflict of interest against the current CEO in the Videocon loan case. The board has not specified any time frame for concluding the probe. Ms Kochhar will be on leave till the enquiry is complete.
Background of Mr Bakshi: Mr. Bakhshi has been the Managing Director & CEO, of ICICI Prudential Life Insurance Company, since August 01, 2010. During his tenure, ICICI Prudential Life Insurance Co. has been a leading private life insurance company in the country. Prior to this role, Mr. Bakhshi was the Deputy Managing Director of ICICI Bank. In this role he headed the retail and the wholesale business. Before moving to the bank, Mr. Bakhshi was the MD & CEO of ICICI Lombard General Insurance. Under his leadership, ICICI Lombard grew to be a leading private general insurance company. Mr. Bakhshi has extensive experience of leading both corporate and retail businesses across ICICI Group. He started his career with ICICI Ltd. in 1986.
ICICI Bank Limited is a banking company. The Bank is engaged in providing a range of banking and financial services, including commercial banking, retail banking, project and corporate finance, working capital finance, insurance, venture capital and private equity, investment banking, broking and treasury products and services. The Bank's business segments are Retail banking, Wholesale banking, Treasury, Other banking, Life insurance, General insurance and Others. It has a network of approximately 18,210 branches and automated teller machines (ATMs). The Bank has approximately 110 Touch Banking branches across over 30 cities. Its international banking is focused on providing solutions for the international banking requirements of its Indian corporate clients and leveraging economic corridors between India and the rest of the world. The Bank caters to the financial needs of women entrepreneurs through its Self-Help Group (SHG) program as a part of its microfinance initiatives.
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