RBL Bank’s Stock has Dropped 18% after a new CEO was Hired

RBL Bank’s stock dropped 18 percent to a 52-week low of Rs 92.9 on June 13 after investors were upset with the new chief executive officer’s selection.

Following the departure of long-time CEO and Managing Director Vishwavi Ahuja approximately six months ago, RBL Bank announced the hiring of R Subramaniakumar for three years on June 11.

Subramaniakumar has 40 years of experience, including spells as the chairman of the Indian Overseas Bank and as the Reserve Bank of India’s designated administrator for the Dewan Housing Finance Corporation.

Media reports had previously linked Standard & Chartered Bank India CEO Zareen Daruwala to the position, raising investor hopes.

The latest appointment, according to brokerage firm CLSA India, raises various issues about the lender.

Brokerages have expressed concern about the lender’s lack of strategy, while they do not expect any new bad credit piles to be reported following the new CEO’s announcement, a process known in banking circles as “kitchen sinking.”

“We are yet to get clarity on the thought process of the new team. However, we don’t expect the management to make any big announcements in the near term,” brokerage firm Kotak Institutional Equities.

Apart from traditional strength areas like microcredit, Subramaniakumar wants RBL Bank to focus more on home loans, rural vehicular finance, and used car finance now, according to business news channel ET.

RBL Bank’s stock was down 17.2 percent on the National Stock Exchange at 10.05 a.m., trading at Rs 94.10.