Beena Parmar Moneycontrol News
Private lender HDFC Bank will soon set the ball rolling on its search for a successor to its founding Chief Executive Officer and Managing Director, Aditya Puri.
Puri, who joined the bank in 1992, will see his tenure end on October 31, 2020 (at the age of 69). While he could technically add one more year to his 26-year stint - RBI has set the age limit for private bank chiefs at 70 - the country's second largest private bank by assets wants to ensure a smooth succession at the top.
At an analyst meet on Wednesday, the bank’s management said it intends to start the process of identifying a successor 18-24 months ahead of Puri’s retirement. The bank plans to have a 12-month overlap period during, which the new successor will work with Puri.
If murmurs in banking industry are anything to go by, current deputy managing director Paresh Sukthankar (55) is placed favourably to succeed Puri.
Puri, 67, said that HDFC Bank will look at grooming talent from within, or outside, and an announcement will be made in the next 18 months.
Like in the case of non-performing assets (NPAs) - where it has the lowest ratio among top banks - Puri would want to set an example in succession planning too.
His peers in ICICI Bank and Axis Bank are embroiled in controversies over their governance standards and performance in their respective banks.
Axis Bank’s Shikha Sharma (59) is set to step down as the CEO and MD in December 2018 after her tenure was cut short from the three year-extension to seven months. Axis has appointed global leadership advisory firm Egon Zehnder to search for Sharma's successor.
Meanwhile, ICICI Bank's Chanda Kochhar (56), whose term is set to end in March 2019, is under pressure to quit amid nepotism charges levelled at her relating to loans given to Videocon Group. The bank has not disclosed any succession plans.
Puri said the bank has laid down a roadmap for the transition of the bank’s CEO position and said that the depth of leadership at the bank will ensure that the handover is smooth.
Analysts say that the leadership change will not alter much for HDFC Bank as it has positioned itself as a process-driven institution.
Puri has accumulated 44 years of work experience. Prior to HDFC Bank, he was CEO of Citibank, Malaysia from 1992 to 1994. Earlier, he worked as a finance director at Mahindra and Mahindra.
Last year, Puri had shared his post-retirement plans, which included working with under-privileged, gardening and pursue writing. Many also expect to see him taking classes at the top management institutes.
For those who have been intrigued by the reclusive banker's corporate life, a book on his HDFC Bank days in his own words would be something to look out for!
Key takeaways from the analyst meet (as per Edelweiss report):
1. Puri will retire by October 2020. Successor will be in place a year prior to Puri’s retirement and bank will maintain focus on organic growth and M&A is not on the table.
2. HDB Financial Services may be listed in the next few years.
3. Target to lower the cost/income ratio to below 40 percent (34 percent in FY18) over the next three-five years.
4. Management doesn’t see concerns on asset quality in unsecured personal loans segment. Even a moderate capex cycle is unlikely to derail retail growth and asset quality in the near-term. Bank has focused on working capital financing and 70 percent of book is in working-capital loans.
5. Targets to become market leader in consumer durables and lifestyle financing segments over the next 18-24 months.
6. Plans to leverage self-employed customer segment which is envisaged to grow at a faster clip than salaried segment.
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