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Last Updated : Feb 11, 2019 07:35 PM IST | Source: Moneycontrol.com

Podcast | Pick of the day: Yes Bank says yes to Ravneet Gill

Yes Bank had requested the RBI to extend Kapoor’s tenure till at least 30 April 2019 but the central bank okayed the extension only till the end of January 2019.

Moneycontrol Contributor @moneycontrolcom

R Mahadevan | Rakesh Sharma

Moneycontrol Contributors

After months of uncertainty and an NPA problem that can only be described as gross, Yes Bank has got its next chief – Ravneet Gill has been appointed as its managing director. This follows the Reserve Bank of India’s denial of permission for the bank’s founder & CEO, Rana Kapoor, to complete his three-year term, which began in June 2018 after shareholder approval.

This whole saga has behind it larger issues that have dogged Indian banking, and continue to. The previous year – 2018, that is – has been one of churn in the banking sector. It was a year that saw public sector banks continue to be in the news in connection with their non performing assets. Private sector banks too have been in focus, dogged by bad loans and dubious practices and questionable decision-making right at the top. Yes Bank has been in the thick of it, with its CEO, Rana Kapoor, being forced to step down. The Reserve Bank of India has brought up questions regarding a range of decisions and practices at the bank, pointing at its poor corporate governance, under-reporting of loans, and auditing methods. In October 2017, it came out that there was a divergence of Rs 6355 crore in the bad loans reported by Yes Bank as against the RBI’s inspection report. Earlier in Financial Year 2016, Yes Bank had reported one sixth of the bad loans that the RBI’s assessment had found. The bank was fined Rs 6 crore for these divergences and also for not immediately reporting a security issue with its ATM network.

Yes Bank had requested the RBI to extend Kapoor’s tenure till at least 30 April 2019 but the central bank okayed the extension only till the end of January 2019.

Yes Bank is India’s fourth largest private sector bank, with deposits of Rs 2.2 billion and loans of Rs 2.4 trillion. During the under-reporting of the bad loans, the market had looked at the positive numbers and had reacted favourably. The bank’s stock has since then seen quite a bit of volatility, on the back of the RBI’s strictures and penalty, the forced change of guard and also the churn happening at the top levels of the bank. The bank’s shares fell sharply by about 50 per cent through September-October of 2018, ultimately falling to Rs 146.75 from a 52-week high of Rs 404 in November 2018. After briefly coming within touching distance of Rs 220 in late January 2019, it now hovers around the Rs 170 mark.

Through all this, the bank has also seen the exit of many of its senior functionaries. The bank’s chairman, Ashok Chawla, resigned in November 2018. Though he cited personal reasons, his resignation came in the wake of his being named in a corruption chargesheet by the Central Bureau of Investigation, in connection with the Aircel-Maxis case investigation.

It is in this scenario of uncertainty and continued setbacks that Ravneet Gill has been appointed managing director and CEO. Ravneet Gill comes to Yes Bank from his position as India head of Deutsche Bank. With his long experience of over a decade and a half in corporate banking while with Deutsche Bank, Gill was seen as a good fit. Rajat Monga, the senior group president of Yes Bank, was the other contender. While he had the advantage of being an insider, it was ultimately felt that Gill’s continued presence at Deutsche Bank in his senior position and his expertise in handling both regulatory issues and decision-making at a global level would be good for Yes Bank. Plus, his being an outsider also meant that he would provide a different perspective and would be unaffected by the ongoing tensions in Yes Bank’s top management.

As an official who was privy to the vetting process noted, when Gill was reconfirmed for the third time recently as CEO of Deutsche Bank, the Reserve Bank would have done the due diligence on him all over again, which meant that his appointment didn’t face problems with the RBI either.

Gill’s reputation as an aggressive and astute banker. His performance over the years at Deutsche Bank has been remarkable. As a statement from Yes Bank mentioned, Gill had been responsible for Deutsche Bank having one of the lowest NPA rate in the industry and also one of the highest returns on equity among large banks in India. A chief with these credentials would certainly hold Yes Bank in good stead in addressing its NPAs and also the problems with the divergences.

Ravneet Gill is someone who insists on “balance” in life, whether in personal life or in work. According to a quote in Economic Times, Gill says, “I think what ultimately gets you into trouble is when the balance goes. Whether it is work-life balance or short- and long-term balance or personal or professional balance. That is probably also the reason why, as he says, he goes to the forest because it is “de-stressing”. The son of a civil servant, his attention was drawn to banking through his peer group, many of whom went into the sector. In retrospect, though, and on a lighter note, his banking connection goes farther back to childhood, when he and Raghuram Rajan were neighbours in Delhi, and used to regularly play cricket, a passion he still has.

With a personality that balances aggressiveness with stability, it is a more-than-reasonable expectation that Gill will quickly come to grips with the complications in his new job at Yes Bank. The markets too seemed to think so, considering that the Yes Bank stock saw a 10 per cent jump when the announcement of Gill’s appointment was made. It is also perhaps to be noted that the market has since pulled the share down by 20 per cent since then.

Gill’s appointment is also likely to benefit Yes Bank in the sense that other banks too are in the throes of uncertainty and churn, and if things settle quickly once Gill is on board, Yes Bank could have something of a first-moved advantage on the road to stability. Gill could very well be what the doctor ordered.
First Published on Feb 11, 2019 07:35 pm
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