Yes Bank Names Ravneet Gill As CEO
A man walks under signage for Yes Bank Ltd. in Mumbai, India (Photographer: Dhiraj Singh/Bloomberg)  

Yes Bank Names Ravneet Gill As CEO

Private sector lender Yes Bank Ltd. has named Ravneet Gill as its next chief executive officer. Gill, currently the head of Deutsche Bank in India, will take charge from founder CEO Rana Kapoor, who will step down at the end of January after the Reserve Bank of India denied him another full term.

“The Bank has received RBI approval for its new Managing Director and CEO, Ravneet Singh Gill for him to join on or before March 1, 2019....The Board will convene on January 29, 2019 to finalise the interim transition,” said the bank as part of a press release issued to announce the lender’s third quarter earnings.

A decision on a new CEO lifts an overhang for investors of Yes Bank. With Kapoor set to exit next week, the lack of clarity over the bank’s top leadership had weighed on the stock. Concerns over whether an insider would be appointed to take over from Kapoor had also bothered investors. Gill’s appointment will ensure a clean-slate for the bank.

Shares of Yes Bank surged following the announcement.

Yes Bank Names Ravneet Gill As CEO

Exit Rana Kapoor; Enter Ravneet Gill

Kapoor’s exit comes amidst a clean-up in the Indian banking sector. In the past year, three private lenders have seen changes in top leadership. Shikha Sharma, former CEO of Axis Bank, exited after she too was denied an extension. Chanda Kochhar left ICICI Bank following allegations of quid pro quo in loans given to the Videocon Group.

In Yes Bank’s case, the bank’s leadership came into question after the regulator pointed out discrepancies in the way the bank reported its bad loan numbers.

Following an RBI audit, Yes Bank reported a large divergence of Rs 4,176 crore in its gross NPAs for the year ended March 2016. In the following financial year, the regulator conducted another audit of bank books, which led to Yes Bank reporting another large divergence. During the financial year ended March 2017, the bank’s divergence stood higher at Rs 6,355 crore.

The divergence report for FY18 is yet to be finalised.

As the bank moved to adjust for these divergences, bad loan ratios moved higher but remained below peers. For the quarter ended December 2018, the bank reported a gross non performing assets ratio of 2.1 percent compared to 1.7 percent last year.

Some of these concerns may have prompted the RBI to reject Kapoor’s application for another three year term at the helm of the bank he co-founded.

Gill’s entry into Yes Bank will represent a fresh start for the lender. A seasoned corporate banker, Gill has been the CEO of Deutsche Bank in India since 2012. He has been at the bank since 1991.

Ravneet Gill brings a lot of credibility and expertise to the role, said independent market expert Ajay Bagga.

Gill has very deep relationships across corporate banks in India. He brings a lot of exposure to international banking. He is a corporate banker and it will help Yes Bank move into the multi-national corporation segment. When foreign bankers have moved to Indian banks we have seen value creation in earlier instances. These bankers bring compliance orientation, deep relationships and strong process orientation that helps in banking.
Ajay Bagga, Market Expert
Ravneet Gill, CEO-designate of Yes Bank. (Source: LinkedIn/Ravneet Gill) 
Ravneet Gill, CEO-designate of Yes Bank. (Source: LinkedIn/Ravneet Gill) 

What Next?

Yes Bank’s board will meet on Jan. 29 to decide on the future course of action, with respect to the transition in leadership. Kapoor’s term at the bank ends on Jan. 31, after which there will be a month-long gap before Gill takes over. According to Rajat Monga, senior group president, the board may decide on appointing an interim leader to head operations in this period.

While the uncertainty over the CEO position may have ended, Kapoor’s future role in the bank remains unclear. He still holds 10 percent in the lender and is designated as an ‘Indian Partner’ along with the family of late co-founder Ashok Kapur.

Kapoor cannot be appointed as the non-executive chairman on the bank’s board since that position must go to an independent person. But even to stay on the board, Kapoor will need to the support of Madhu Kapur, wife of late Ashok Kapur.

The two families have been fighting a bitter battle over joint nomination rights given to them in the bank’s Articles of Association. While RBI’s rejection of Kapoor’s leadership prompted a resumption of dialogue between the two sides, an agreement over the nomination rights is yet to be arrived at.

A person close to the Kapur family said that they welcome Gill’s appointment and are comfortable with it. However, any other nominations, including Kapoor’s position on the Yes Bank board, would need to be made in agreement with them. If the appointments go through without their approval, they will litigate the matter in court, this person said.

Moreover, in its announcement in September 2018, the bank’s board had said it intends to elevate Rajat Monga and Pralay Mondal as executive directors, which would also earn them a board seat. These appointments will also need the support of the Kapur family.

Shagun Gogia, Kapur’s daughter, did not respond to calls or messages.

Monga said that the board will discuss all these issues in the upcoming meeting.

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