IndusInd Bank has shortlisted Spencer Stuart to search for a new chief executive after Sumant Kathpalia stepped down Tuesday as its managing director and CEO. The bank, which a committee of executives will run for now, is expected to finalise its new chief in a couple of months, said senior executives aware of the development.
IndusInd Bank’s deputy CEO Arun Khurana also resigned this week after accounting discrepancies were recently discovered in the bank’s derivatives portfolio.
“Spencer Stuart was selected in March and the search for the new CEO should get over in the next couple of months. For good corporate governance, the bank may look at other search firms for its other senior positions or even take someone internally. But Spencer Stuart will take care of the CEO mandate,” said a senior executive aware of the development.
Spencer Stuart is part of top headhunting firms popularly called ‘SHREK’—the others being Heidrick & Struggles, Russell Reynolds, Egon Zehnder, and Korn Ferry.
Egon Zehnder has been the go-to firm for hiring CEOs for private banks. HDFC Bank, Axis Bank, and RBL Bank have appointed Egon Zehnder to look for chief executive candidates.
IndusInd and Spencer Stuart did not respond to Mint’s queries sent on Wednesday.
“Besides the position of a CEO, there are other spots that are open because some of the senior executives are close to retirement. For those, the bank will look at other search firms or even an internal pipeline,” said the executive quoted earlier. “The new CEO could also bring in one’s own set of seniors from the industry, and over the next few months, there will be changes in order in the bank.”
According to another senior executive, the new CEO appointment at IndusInd Bank may take little time because top executive movements are swift. Typically, companies are quick to let go of a senior executive handling sensitive information once they submit their papers.
IndusInd’s ‘committee of executives’
The Reserve Bank of India has allowed the board of IndusInd Bank to constitute a ‘committee of executives’ to run the bank.
The ‘committee of executives’ will comprise Soumitra Sen, head of consumer banking and marketing, and chief administrative officer Anil Rao. They will oversee IndusInd Bank’s operations under the guidance of an oversight committee of the board.
The oversight committee will be headed by Sunil Mehta, chairman of IndusInd Bank’s board, and include the chairs of the bank’s audit committee, the compensation and nomination and remuneration committee, and the risk management committee.
“The board has constituted such ‘committee of executives’ to oversee the operations of the bank, under the oversight and guidance of the oversight committee of the board till a new MD & CEO of the bank assumes charge, or a period of 3 months from the date of relieving the incumbent MD & CEO, whichever is earlier,” IndusInd Bank said in a notification on Wednesday.
“The bank is taking all necessary steps to ensure stability and continuity of its operations while maintaining high standards of governance,” it added.
On 10 March, IndusInd Bank flagged discrepancies worth about ₹1,530 crore in its derivatives account balances. Kathpalia had informed analysts on a call soon after the disclosure that this could have led RBI to allow him only a one-year extension instead of three.
Kathpalia, who headed IndusInd Bank for five years, said he was stepping down due to the ongoing derivatives issue. “I undertake moral responsibility, given the various acts of commission/omission that have been brought to my notice,” Kathpalia wrote in his resignation letter to the bank, asking to be let go from the close of working hours on Tuesday.
IndusInd Bank shares ended Wednesday nearly unchanged at ₹838.45 each on BSE.
