Paresh Sukthankar’s Exit Fast-Tracks Succession Plan At HDFC Bank
Depth and size of the bank is not subject to any individual; not even me, says Aditya Puri.
The surprise exit of Paresh Sukthankar has hastened the succession plan at HDFC Bank Ltd.
India's largest private sector lender by market value said today the search for the successor of its Managing Director Aditya Puri is on and the board will discuss its next course of action within a fortnight. Sukthankar, deputy managing director and founding member of the bank, on Friday resigned from his post, citing personal reasons. He was one of the contenders to take over from Puri who is set to retire in October 2020.
Calling Sukthankar’s exit as non-acrimonious and graceful, Puri in a conference call on Monday said, “his exit will not affect the normal functioning of the bank.” “Depth and size of the bank is not subject to any individual, not even to me,” he assured investors.
The bank will not have the deputy managing director post any more, Puri said. “The position was a recognition given to Paresh.”
Puri said the bank will keep investors advised and assured them that their money is safe. “Seventy-five percent of my transition has already been baked in,” he said on the concall.
Brokerage Take
Most analysts aren’t too concerned about the latest development at HDFC Bank as they believe it has a strong bench strength. They see the uncertainty around the succession planning is a temporary blip in the near-term.
Citi Research
- Sukthankar was seen as a natural successor to managing director Aditya Puri.
- Sukhtankar’s exit after 24 years can create a short-term disruption. This increases the chances of an external candidate as new managing director.
Macquarie
- Several top management personnel left in the last five years; confident that HDFC Bank can manage this challenge well.
JPMorgan
- While no operational issues are seen due to the unexpected departure of a key management personnel, it can lead to a temporary stall in the stock’s outperformance.
Kotak Securities
- HDFC Bank arguably has one of the best bench strengths.
- Don’t see any near-term concerns to business given the strength of the senior management team.
Shares of the lender were trading 1.4 percent lower at Rs 2,085.30 apiece on the BSE.