Yes Bank promoter saga not over despite naming new CEO

Yes Bank promoter saga not over despite naming new CEO

AgenciesUpdated: Wednesday, May 29, 2019, 03:05 AM IST
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Mumbai: The announcement that Deutsche Bank India chief Ravneet Gill will succeed Rana Kapoor as managing director and chief executive officer of Yes Bank may have ended the transition concerns, but the promoter group issues continue to linger. This can still impede future board decisions, as per multiple sources involved with the issue. When the Kapoor-led board on Thursday announced that Gill will take over the reins at Yes Bank on or before March 1, the other promoter group led by Madhu Kapur welcomed the appointment and wished Gill luck. The Reserve Bank of India approval for Gill, over the internal candidate Rajat Monga for the top post, is seen as a satisfactory outcome for both sides, due to Monga’s perceived closeness to Kapoor. However, refuting media reports indicating a quick settlement between the promoter groups, sources close to the Kapur side have insisted that any resolution to the pending issues such as appointment of board members or promoter rights for top-level appointments at the bank, remain a “work in progress” with no immediate deal in sight. The bank was promoted by Rana Kapoor and the late Ashok Kapur, who was killed in the 26/11 attacks. Kapoor has since contended that as founder and promoter, his rights are stronger than those of Kapur’s family, which has inherited the rights. This had sparked off a series of litigation, which culminated in a ruling, which largely favoured and upheld the rights of the Kapur family, even as it called for treating Yes Bank as a professional institution.

For Gill’s appointment, the Kapur side was not informed, even though their contention is that they have a say in the appointment of the managing director and chief executive officer, chairman and three board members. The Kapoor side believes that based on the legal opinion, in the case of RBI-approved appointments to the board, the promoters can’t claim to have a say. The issues are unlikely to die down anytime soon, as the Jan 29 board meet is set to discuss the transition period between Jan 31, when Kapoor’s term ends and March 1 by when Gill has to take charge. Kapoor’s own role during the transition and after that, including whether he will be on the board is set to be discussed. Kapoor’s side insists that as a promoter of the bank, he has a non-retiring seat on the board as long as the cumulative promoter stake is 10 per cent or above. The cumulative stake, including both groups, currently stands at 19.82 per cent with Kapoor’s holdings at 10.63 per cent and Kapur’s at 9.19 per cent.

Kapoor’s side also claim that Kapur family doesn’t have the same rights, as they are a promoter group and not a promoter. This interpretation is a key issue of contention as Kapoor may have to relinquish his seat on the board when he steps down as the head of the bank, and will have to be re-appointed using this route. Legal experts say that the RBI view on whether Kapoor who was not granted a fresh three-year term as MD and CEO, is “fit and proper” to be given a non-retiring board seat, remains a key question. In case, Kapoor flexes his promoter rights in this case, the Kapur family is likely to contest it or even seek a similar board seat for their own nominee. The pending RBI approval for Monga’s elevation to the board as a whole time member, amidst talk that he may get the position of deputy managing director, is also a question on which there could be some friction between the two promoter groups, the sources said. The Kapur group points out that Monga’s application is still pending even as Gill’s appointment was quickly cleared by the RBI.

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